Academic research finds that readable financial disclosures help not only investors, but companies as well.
The study, by Scott Asay of the University of Iowa, W. Brooke Elliott of the University of Illinois at Urbana-Champaign and Kristina M. Rennekamp of Cornell University, found that companies that try to obfuscate negative results with confusing jargon and presentation in their press releases can turn off investors. Instead, investors are more likely to turn to outside sources of information, such as financial analysts, for a clearer explanation of a company’s financial results.
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