Not necessarily audio related...

Just a general question regarding ADC specs. For example a 16bit ADC should have dynamic range and SINAD of 96dB.

I already disagree with you here...

An ideal undithered 16 bits ADC converting a full-scale sine wave at a frequency that has no rational relation to the sample rate should theoretically have a SINAD of about 98 dB, 20 dB*log10(2)*n + 10 dB*log10(3/2). The extra term is due to the fact that a sine wave spends more time near its peaks than near zero, so it has more power than uniformly distributed noise with the same peak-to-peak value.

For audio, one would normally want to dither the ADC to make the quantization error sound like noise rather than distortion, and to ensure that details below 1 LSB are not entirely lost. This reduces the SINAD by 10 dB*log10(3) ~= 4.77 dB if it is 2 LSB peak-to-peak triangular probability density function dither, but as triangular dither is hard to make in an analogue way, using Gaussian noise and accepting a noise penalty of about 6 dB may be more practical.

In either case, this SINAD is based only on quantization noise with or without dither. In many practical cases, particularly for oversampling converters with a digital decimation filter, adding a couple of bits to the output to reduce quantization noise is cheap in terms of power and chip area compared to reducing the analogue noise floor. It then makes sense to add a few bits to make quantization noise negligible and let the analogue noise determine the performance.

On top of that there is of course the commercial side. If there is a market for converters with 32 bit output wordlength and 16 bit performance, there will be companies that make them, no matter whether it makes sense technically.