Who Likes Jargon? The Joint Effect of Jargon Type and Industry Knowledge on Investors’ Judgments

55 Pages Posted: 21 Nov 2016 Last revised: 10 Mar 2019

See all articles by Hun-Tong Tan

Hun-Tong Tan

Nanyang Business School, Nanyang Technological University

Elaine Wang

University of Massachusetts Amherst

G-Song Yoo

Korea University Business School

Date Written: February 5, 2019

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

JEL Classification: D83, M41

Suggested Citation

Tan, Hun-Tong and Wang, Elaine (Ying) and Yoo, G-Song, Who Likes Jargon? The Joint Effect of Jargon Type and Industry Knowledge on Investors’ Judgments (February 5, 2019). Journal of Accounting & Economics (JAE), 2019, Available at SSRN: https://ssrn.com/abstract=2872212 or http://dx.doi.org/10.2139/ssrn.2872212

Hun-Tong Tan

Nanyang Business School, Nanyang Technological University ( email )

Singapore, 639798
Singapore
+65 6790 4819 (Phone)
+65 6793 7956 (Fax)

Elaine (Ying) Wang (Contact Author)

University of Massachusetts Amherst ( email )

Amherst, MA 01003-4910
United States
413-545-7613 (Phone)

G-Song Yoo

Korea University Business School ( email )

145 Anam-ro, Seoungbuk-gu
HM 628
Seoul, 02841
Korea, Republic of (South Korea)

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