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.

Research topics

financial disclosurereadabilityfirm valuetextual analysis