Managing Investors' Perception Through Strategic Word Choices in Financial Narratives

Abstract

Corporate managers have been shown to successfully use narrative impression management techniques to influence investors' perceptions of company performance. Examples of these techniques include using complex language to disguise bad news, attributing bad news to external forces, altering the tone of the narratives to sound more positive, and writing with more verbs than adjectives to convey the context as concrete. We provide an overview of the research examining managers' impression management techniques through word choice, along with evidence that suggests how investors respond. Based on this information, managers may wish to consider strategically choosing their language to ensure that their message is interpreted as intended. © 2015 Wiley Periodicals, Inc.

The Deception Spiral: Corporate Obfuscation Leads to Perceptions of Immorality and Cheating Behavior

“…The linguistic obfuscation hypothesis suggests that verbal content (e.g., as indicated by rates of jargon, positive emotion words, and causal terms), style (e.g., as indicated by abstraction), and structure (e.g., as indicated by readability) are related to deceptive intent. Given the strong empirical evidence supporting the obfuscation hypothesis (Bloomfield, 2002; Burgoon et al, 2016; Courtis, 1998; Garrett et al, 2016; Humpherys et al, 2011; Li, 2008; Mann et al, 2014; Riley & Luippold, 2015), which suggests the lack of clarity in writing often signals false speech (see also McCornack, 1992) and is indicated by specific language patterns, we predict that companies with ethics infractions will use more linguistic obfuscation in their values statements than those without ethics infractions.…”

“…Evidence for the obfuscation hypothesis is robust (Bloomfield, 2002; Burgoon et al, 2016; Courtis, 1998; Garrett et al, 2016; Humpherys et al, 2011; Li, 2008; Mann et al, 2014; Riley & Luippold, 2015) and has been extended to domains where people write about other forms of unethical behavior. For example, deceptive scientists—who tried to present their studies as genuine but had their papers retracted for fraud—used a more abstract writing style, more jargon, and less readable writing as compared with honest scientists (Markowitz & Hancock, 2016).…”

The identity of social impact venture capitalists: exploring social linguistic positioning and linguistic distinctiveness through text mining

“…When adopting controllable communication means, such as official websites, managers have to strategically decide what and how to communicate to clearly define the organization's attributes while simultaneously differentiating it from others in the eyes of external stakeholders (Scott & Lane, 2000). In these contexts, language plays a relevant role (Packard & Berger, 2017;Riley & Luippold, 2015;Thibodeau & Boroditsky, 2013;Younger & Fisher, 2020).…”

When Do Words Matter? Understanding the Impact of Lexical Choice on Audience Perception Using Individual Treatment Effect Estimation

“…Numerous examples from cognitive science, linguistics, and marketing show that lexical choice can affect audience perception (Danescu-Niculescu-Mizil et al 2012;Ludwig et al 2013;Thibodeau and Boroditsky 2013;Riley and Luippold 2015;Reddy and Knight 2016;Preot ¸iuc-Pietro, Guntuku, and Ungar 2017;Packard and Berger 2017;Nguyen et al 2017). For example, a social media user who writes "I'm excited!"…”