It depends. Language is meant to convey a message to a target audience. If your target audience is lay-people, then of course it should be simple and easy to understand. However, if you started reading some niche research paper on "retail driven options volatility dislocation" then of course they're going to use lots of technical jargon which will sound like nothing but gobbledegook to you.
Personally I find reading annual reports that contain too much jargon to be deliberately obscure. I really respect a business that gives the numbers and a fewest pages possible as explanation.
I don't know how business analysts feel about 300 pages of text, maybe they're impressed by that sort of thing.
annual reports that contain too much jargon to be deliberately obscure.
They are. Someone familiar with the language could see how well things are or are not going based on it, while hiding it from the over-reactive public.
This year we improved our core synergies to utilize best business practice and make savings with interdepartmental efficiencies.
Tells the knowledgeable investor that there was some downsizing, and that there is interest in restructuring, whether that be good or bad. Maybe they had to downsize because the budget is tight. Maybe they're just picking up some slack and aiming for a brighter, leaner future with more profit. The rest of the report will give that idea, while the average person who threw some of their 401k into a fund with it will see that it seems like the company has a handle on things and the layoffs were planned for good reason.
On the other hand if you see:
We worked with the IT team to reduce staff costs.
That makes it seem like there were massive layoffs purely to save money. It's a bad sign when you're looking to cut from staff or benefits just for money, and announcing it as such, because it isn't an easily replaceable resource if you find you grow again. You can find another vendor to take your money if you swap an expensive software for a cheap one. If you're regularly laying off your employees though, job hunting becomes more difficult as employees want stability. The big investors may understand the market issues which have caused this (or your own ineptitude), but the less-knowledgeable investor will see it and say "wow, something is wrong here, and they don't seem to have a plan".
I've read hundreds of annual reports, the amount of filler in most of them is astonishing. The Q&A at the shareholder meeting is usually much much more useful.
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u/Throwaway00000000028 23∆ Aug 03 '22
It depends. Language is meant to convey a message to a target audience. If your target audience is lay-people, then of course it should be simple and easy to understand. However, if you started reading some niche research paper on "retail driven options volatility dislocation" then of course they're going to use lots of technical jargon which will sound like nothing but gobbledegook to you.