Abstract: In recent years, Chinese family firms have gradually entered into succession stages. Family intergenerational succession is not only the key to the sustainable development of family firms, but a challenge during this process. With the China capital market developing, especially the comprehensive registration system implementing, and the content and form of information disclosure diversifying, the annual report text information disclosure quality is increasingly important. Based on the above background, this paper takes Chinese A-share listed family firms from 2009 to 2019 as research samples to study the impact of family intergenerational succession on the readability of annual report text information by means of readability index constructed from different dimensions. The study finds that family intergenerational succession improves the annual report readability. Mechanism test finds that family firms will improve significantly the the annual report readability after family intergenerational succession in order to alleviate the agency problem and maintain family reputation. After considering a series of endogenous problems, the results are still robust. Heterogeneity test finds that the positive impact of family intergenerational succession on annual report readability is more pronounced for entrepreneurial family firms, for family firms operating in less competitive industries and for those located in area with a high marketization degree. Furthermore, relative to the preparatory stage of family intergenerational succession, when heirs formally take charge of their family firm, they are even eager to make annual reports more readable. This paper enriches and develops the research results in the field of family intergenerational succession and annual report readability, and also provides certain policy implications for family firms that are in or about to enter the intergenerational stage.

Key words: family firms, intergenerational succession, annual report readability, agency problem, family reputation