Research: Simple Writing Pays Off (Literally)

Financial writing is full of jargon and complexity. But a series of research suggests that investors are drawn to simple, clear writing with short sentences. The simple reason is that complex writing is off-putting — people tune out and find it dull, a fact confirmed by neuroscience research. The author reviews a series of studies on the financial value of good writing and offers a few tips to companies looking to communicate more clearly with investors, or with anyone else.

When SEC Chairman Arthur Levitt championed “plain English” writing in the 1990s, he argued that simpler financial disclosures would help investors make more informed decisions. Since then, we’ve also learned that it can help companies make more money. 

Researchers have confirmed that if you write simply and directly in disclosures like 10-Ks you can attract more investors, cut the cost of debt and equity, and even save money and time on audits.  

A landmark experiment by…

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This article was written by Bill Birchard and originally published on hbr.org