Use Simple English In Financial Writing To Impress Readers: Research Study Shows

Use Simple English In Financial Writing To Impress Readers: Research Study Shows

Using complicated English words can prove to be counterproductive, says study

Corporate writing is required for various purposes, from pitching a business idea to writing annual reports and drafting a formal email. This form of writing is often replete with jargon or terms that can be decoded only by a few. 

Many believe this helps project professionalism through work and leaves a good impression on the reader. However, studies suggest that overly complicated writing can have some consequences.

In an experiment conducted by Kristina Rennekamp, a professor of Accounting at Cornell University, in 2012, it was observed that companies tend to lose readers due to poor processing fluency of their corporate writing.

Processing fluency is a measure used by neuroscientists and psychologists to assess the readability of something. 

The professor worked with readers of corporate press releases in the experiment. She gave people two versions of a press release and asked them to evaluate them.

While one was an actual release from a soft drink company, the other was edited using simple language based on the United States Security and Exchange Commission’s (SEC) Plain English Handbook.

The handbook is a guide which shows how to create clearer and more informative disclosure documents by writing in plain English.

According to the book, plain English means using short sentences, active voice, everyday words, and “personal pronouns that speak directly to the reader”.

Ms Rennekamp utilised the readability standards stated in the handbook and demonstrated that companies could effectively hook the reader if they use simpler English.

“I find that more readable disclosures lead to stronger reactions from small investors so that changes in valuation judgments are more positive when news is good and more negative when news is bad,” Rennekamp wrote in the study.

She added that “processing fluency from a more readable disclosure acts as a heuristic cue and increases investors’ beliefs that they can rely on the information in the disclosure.”

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