Context specific language or jargon helps, by definition, to efficiently and precisely transfer information. However, due to its complex nature, jargon might also be a tool to obfuscate information. This paper studies whether jargon is used in verbal firm disclosures to obfuscate or to efficiently transfer information. We observe that, within the Q&A of earnings conference calls, managers use less jargon in responses to tougher questions, and in calls after a quarter of bad success. Moreover, markets interpret the lack of precise information as a bad signal: we find lower cumulative abnormal returns and a higher implied volatility following earnings calls where managers use less jargon. These results support the argument that an excessive use of non-factual language is perceived as blathering that retards the reduction of information asymmetries.

This paper investigates the impact of precise language on market efficiency by examining the interplay between regulatory language simplification, as imposed by the Plain Writing Act of 2010, and information asymmetries in financial markets. We posit that financial jargon, while often criticized as complex, plays a pivotal role in facilitating efficient information dissemination within the market. Analyzing earnings conference call text data, we employ an instrumental variable event study framework to evaluate the consequences of the Plain Writing Act. Our findings suggest that the Act's promotion of plain language usage results in a reduction of financial jargon. Paradoxically, this reduction in jargon is associated with a decrease in market efficiency, implying that the Act may inadvertently hinder information flow and impair the market's price setting mechanism.