Who likes jargon? The joint effect of jargon type and industry knowledge on investors’ judgments

Hun-Tong Tan, Elaine Ying Wang and G-Song Yoo

Journal of Accounting and Economics, 2019, vol. 67, issue 2, 416-437

Abstract: We experimentally investigate how jargon affects investment willingness for investors with different industry knowledge, and whether such effects vary with good or bad jargon. We find that for investors without industry knowledge, jargon decreases investment willingness because it decreases understanding. However, for investors with some but low industry knowledge, jargon increases investment willingness because it increases perceived product premium. Such effects exist whether good or bad jargon is used. Finally, investors with high industry knowledge differentiate between good and bad jargon, and reduce investment willingness only when bad jargon is used. These findings have implications for regulators, managers, and investors.

Keywords: Jargon; Industry knowledge; Good jargon; Bad jargon (search for similar items in EconPapers)
JEL-codes: D83 M41 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:67:y:2019:i:2:p:416-437

DOI: 10.1016/j.jacceco.2019.03.001

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