We use an experiment with experienced managers to provide more-direct evidence on how reporting goals and firm performance influence language choices. We find that bad news disclosures are less readable than good news, but only when managers have a stronger self-enhancement motive. Our results...

In this study we use an experiment to examine whether home bias is caused, at least in part, by a psychological bias that can be reduced by highlighting concrete language in disclosures. Our results show that, when abstract language is highlighted in a prospectus, prospective investors are...

As part of its push for more plain English in disclosures, the SEC argues that firms should use more concrete language in order to make abstract concepts clearer to investors. In this study, we use an experiment to show that, when concrete language is highlighted in a prospectus, investors are...