The power of the PowerPoint slide: Simple presentation effects can convince investors to invest

Sarah Spickernell
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Investors should be aware of the effects being adopted, Elliot says (Source: Getty)
Even among the most experienced investors, a thoughtfully placed information pyramid and the carefully timed disappearance of a thought bubble can work wonders in convincing them that a company is worth getting involved in.
W. Brooke Elliott, a professor of accountancy at the University of Illinois, looked into the effect of corporate presentations on the decisions of investors. She found that simple visual effects could have as much impact as the information being conveyed on final investment decisions.
"Corporations typically use both pictures and words to convey information and shape the narrative, but their decision about what to make more prominent can have a huge effect on less-numerate investors, who are more likely to rely on non-numerical information when making decisions,” she said. Less numerate investors are those who are slower at processing numerical information.
Elliott and her co-researchers found that a fit between the style and presentation of corporate reports “positively influences the willingness of the less-numerate to invest.”
"Taken together, it suggests that less-numerate investors are more likely to be influenced by the positive associations generated by the presentation choices in reports than more-numerate investors."
According to Elliott, the key is for corporations to align their strategy and project a uniform approach throughout the report. So if you're going to keep bringing up the same main objective, make sure it is always worded in a similar way and appears on a similar part of the slide.
"If you look at the Corporate Social Responsibility (CSR) reports for the Fortune 100, more than half have a mismatch in their strategy and presentation style," she said. "So our research has definite implications for how to best design CSR reports that are more appealing to investors, or how to craft ones that would be more helpful in processing information.”
Additionally, she found that companies wishing to project a global focus should emphasise text, which is better suited to depicting abstract, high-level details. On the other hand, companies wishing to project a more community-based appeal should emphasise pictures, which do a better job of depicting concrete, low-level details.
So if a company wants to project that it's saving the world, "which is a high-level and somewhat abstract concept," then the depiction should be similarly high-level, too, Elliott said: "It's not that they shouldn't use pictures at all, it just means that words should receive higher priority.
“How you depict your corporate social responsibility on the front end – whether it's favoring a local or global focus, or an abstract or concrete, high- or low-level detail – should match the way it presents its performance information."
But it is not just companies trying to attract investors that have something to learn from the results of the study. Elliot suggests that investors find ways to be more resilient to the effects adopted by those giving presentations.
"Investors should be aware that features of CSR reports can subconsciously influence their judgments, and that the style and presentation features can interact together to influence how they evaluate a company,” she said.

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