The importance of a clear writing style

In past decades we have observed how short text messages slowly replace elaborately written texts, letters and reports. In the world of short text messages, errors and typos are frequent and easily forgiven. The length of the text usually makes a discussion about structure irrelevant relative to the choice of the proper Emoji. As result, many of the younger generations have much less writing experience than older generations.

However, longer texts are still very important, for instance in financial disclosures. Anand et al. (2021) provide some interesting results with respect to the readability of financial disclosures on future shareholder activism. They find that financial disclosures that are easier to read lead to less future shareholder activism as measured by shareholder proposals. This seems to suggest that a part of the shareholder proposals are caused by a lack of understanding of the firm’s policies or actions.

REFERENCES

Anand, Abhinav, Xing Huan, and Jalaj Pathak, 2021. Does financial disclosure readability predict shareholder activism? IIM Bangalore Research Paper No. 654. SSRN Working Paper 3991459

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s