JFE2017
It Pays to Write Well
Journal of Financial Economics 124, 373-394
In one sentence
Issuing financial disclosure documents that are difficult to read can cause firms to trade at substantial discounts.
Summary
Using copy-editing software that measures the prevalence of writing faults that negatively affect readability, we provide evidence that having disclosure documents of low readability causes firms to trade at significant discounts relative to their fundamental values.
Data, code & appendices
Please check out the STATA code under "Code and Data" to reproduce our main results.