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.

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