November 15, 2026

Jargon is where bad results go to hide

Detailed view of business reports with graphs during a corporate meeting.

Stuff argues today that corporate BS is everywhere in New Zealand and is quietly costing people on their careers and their investments. That is right, but it still undersells the problem. Jargon is not an irritating personality tic of middle managers. It is one of the most reliable places weak performance and unpriced risk go to hide, and New Zealand’s own regulators have spent a decade documenting it.

Six billion dollars of words nobody understood

The textbook case is JPMorgan’s 2012 London Whale. In 2025, Yale’s Jeffrey Sonnenfeld revisited how jargon fuelled the disaster. Trader Bruno Iksil’s strategy was pitched in lines like “go long risk on some belly tranches”. The US Senate investigation later concluded the proposal used “jargon that even the relevant actors and regulators could not understand”. The bill was more than $6 billion in trading losses and $1 billion in fines.

Sonnenfeld’s key point was behavioural. Executives and directors did not ask clarifying questions because they feared looking unsophisticated. The language did not just describe the risk, it shielded it from the people paid to catch it.

None of this was new. Back in 2003 the Herald reported on Deloitte’s post-Enron jargon detector, noting Deloitte’s analysis found Enron’s communications grew “more obtuse the deeper the company sank” into its accounting scandal.

Our regulators keep finding the same fog

New Zealand’s listed sector has been told repeatedly to write more clearly, and has mostly declined. In 2016 the FMA found listed companies disclosed only about two-thirds of useful governance information, against 24% for unlisted companies. Its 2018 review of NZX 50 financial statements found only 12 of 50 entities made substantial improvements, while 56% changed nothing at all.

The auditors are no better. A 2022 XRB study of 470 audit reports found the Key Audit Matters, the bit meant to flag the biggest risks, were “very difficult to read” in 98% of cases. About half needed an advanced university degree to follow, 84% of 2021 matters were recycled from 2020, and peer companies shared roughly 50% identical wording. That is boilerplate masquerading as risk disclosure.

In April 2026 the FMA published fresh monitoring insights covering 60 statements filed between 2022 and 2025. The regulator is still having to run the exercise, which tells you how far the message has landed.

Bad numbers reach for softer metrics

The sharpest local evidence comes from Otago. Its 2018 study found non-GAAP disclosures, the company-defined earnings figures, rose 69% as CEO cash pay moved from median to the upper quartile. Loss-making firms lifted non-GAAP use from 33% to 70%, while firms growing earnings went from just 53% to 57%. The pattern is plain. Creative language and creative metrics surge when results are poor or the boss’s pay is exposed.

Markets punish waffle, eventually

Investors do price this. Research by Ole-Kristian Hope and Jingjing Wang, reported in 2019, found stock liquidity fell 9% when CEOs sounded deceptive on earnings calls, with superlatives like “phenomenal” and phrases such as “everybody knows” among the tells. Nomura analysis covered in 2021 found plain-speaking executives significantly outperformed evasive ones. MoneyWeek’s verdict was blunt: an executive who cannot explain strategy clearly either does not know what they are doing or is hiding it, and “neither is a good prospect”.

Aston Business School research adds a sting: boilerplate risk language is not always penalised up front, but once the risk materialises, investors judge those managers less credible and pull back. The bill arrives late, and it is bigger.

Not every buzzword is a cover-up

Fairness matters here. Some jargon is insecurity, not fraud. In 2024 economist Brad Olsen said people use big words to bamboozle when they lack confidence, and that “if you can say it simply then you quite clearly should”. Massey’s Heather Kavan suggested in the same piece that people grab buzzwords when unsure or short of time. Nicola Willis, defending the plain language rules for the public service, said “we don’t have time to waste with puffery”.

In 2018 André Spicer, author of Business Bullshit, told RNZ that in many firms “it’s often better to talk a lot and do nothing”, with change managers gone before the damage shows. Whether the motive is fear or concealment, the effect on shareholders is the same.

Read the fog as a signal

The practical response is simple. Directors should refuse to approve papers they cannot paraphrase, and ask the dumb question the London Whale board never did. Investors should compare Key Audit Matters year on year, flag recycled wording, and treat a sudden swing towards adjusted earnings as a prompt to dig, not a convenience. And executives should understand the market is listening for clarity as closely as for numbers.

With the government already forcing plain language on the public sector, the private sector would be wise to clean up voluntarily before someone decides the FMA needs sharper tools. Clear writing is cheaper than new rules, and far cheaper than the next write-down nobody saw coming.

Sources

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