While model report is widely used in ancient and modern China, the evidence is rare. The reporter faces a dilemma: Should similar reports be reported to avoid disclosure risk or diversified reports be reported to communicate private information? This paper aims to investigate how investors evaluate textual similarity of Management Discussion and Analysis ( MD&A) in the Chinese annual reports. Based on a sample of textual information of MD&A of listed firms in China, the vertical textual similarity ( VTS) is measured by the Levenshtein edit distance between an MD&A in year t and that in year t-1 and horizontal textual similarity ( HTS) is measured by the mean value of the Levenshtein edit distance among all firms. The following results are found. First, market reaction of VTS is contingent on financial risks. When companies suffer losses, report small profits or release modified audit opinions, VTS is negatively related with short term abnormal return. Oppositely, when companies' financial risks are low, market reaction is positively associated with VTS. Second, HTS is negatively related with market return in the whole sample. Third, economic consequences of VTS is contingent on corporate innovation, specific information, Chairman'power and transaction suspending. Finally, economic consequences of HTS is affected by the social network of independent directors. Taken together, the results indicate that both VTS in financial distressed companies and HTS are harmful to private information communication and will have negative economic consequences.