In the corporate world, there is a term corporate bullshit — catchy but essentially meaningless or vague phrases that companies use in situations of failed strategies or even banal uncertainty. In a new study, psychologist Shane Littrell shows that the tendency to 'fall for' such corporate speech is associated with relatively low quality of decision-making at work. For investors, this can become yet another tool for filtering information and a way to assess how much to trust the people in whose companies you have invested.
What is corporate bullshit
The author of the research, cognitive psychologist Shane Littrell from Cornell University, defines corporate bullshit as a specific type of information: logically and semantically dubious, yet presented in a way that seems significant and impressive. In cases involving corporations and companies, this is often a mix of jargon, vague promises, lofty goals, and trendy buzzwords — 'transformation', 'ecosystem', 'synergies', 'revolutionizing user experience', along with their combinations. The goal of such speech is not to explain the business but to impact emotions.
Littrell and colleagues essentially did what many investors dream of: they created the Corporate Bullshit Receptivity Scale. This is the product of experiments involving over 1000 people. They were shown a set of phrases: some were generated by an algorithm that composes sentences using typical corporate jargon, while others were real quotes from speeches by top managers. Participants were then asked to evaluate how substantive these statements seemed, and their analytical thinking was assessed as part of cognitive function, as well as decision-making quality in simulated work situations. Those who rated corporate bullshit higher generally performed worse on tests of effective decision-making. They were more likely to admire 'inspiring' leadership and elevated company missions, but less often demonstrated a cold, critical view of the facts.
Criteria for corporate bullshit
Based on the research, several criteria can be identified that are characteristic of corporate bullshit.
— Ratio of slogans to specifics. The more a company uses phrases like 'we are rethinking the industry' or 'creating the ecosystem of the future' in its communications without explaining the mechanics of profit generation, the higher the level of corporate bullshit.
— Focus on 'vanity' metrics. If a company mainly talks about user numbers, downloads, 'transaction volume processed' and hardly discusses margins, funding costs, credit losses, or other financial data, this can be considered a red flag.
— Moving from reporting to 'adjusted' metrics. If a company often uses adjusted metrics in communications, such as EBITDA, 'adjusted profits', and other indicators without a transparent link to official reporting, it makes sense to view this as a convenient facade behind which problems can easily be hidden.
— Attitude towards risks. Corporate bullshit tends to avoid discussions of failures, so if management's speech hardly mentions threats or lacks acknowledgment of mistakes, discussions of regulatory risks, or scenarios of deteriorating situations, and everything is presented as a linear movement towards a 'bright future', it is a reason for concern.
— Communication style with investors. It's not just what is said, but how. Often, short yet substantive responses to uncomfortable questions from analysts, a willingness to explain negative trends, and not 'beating around the bush' are signs of a healthier management culture. In contrast, constant evasion into generalities when specific questions arise is a signal of corporate bullshit.
How to convert this into a plus for investments?
For an investor, this can lead to a simple conclusion: if the management of a company and a significant portion of its employees live in a world of corporate bullshit, the risk of poor quality management decisions is higher. This also means that it makes sense to pay more attention to the words, as corporate bullshit hinders the investor through two channels.
Firstly, it distorts the picture of the business, creating the illusion of clarity where there are actually many risks and unknowns. Secondly, it complicates the assessment of management decisions: you hear highfalutin speech and leave with a feeling of 'great', but cannot formulate a single concrete thesis that can be verified with numbers or other facts.
In practical terms, one can rely on at least three sources: CEO letters, investor presentations, and transcripts of conference calls. The key question here is rather: how easy is it to formulate 3-5 verifiable statements about the business model, profit drivers, and risks after reading or listening? If instead you have a list of abstract slogans, corporate bullshit may obstruct rational decision-making for the investor, not just the top management of the company.
Another way is to track the dynamics of statements. If, as the company grows and market conditions change, the tone of communication becomes more grounded and discussions of risks become more open, then this can be a positive signal. The company is essentially passing a maturity test: less abstract concepts, more adult conversations about money and threats.
Instead of output
Corporate bullshit is not just loud statements; it is a risk factor for investments that makes sense to consider. Studies show that people who struggle to distinguish empty but flashy phrases from confident, substantive language tend to make weaker decisions on average. The correlation with intelligence level is significantly weaker — the issue is not IQ, but how a person processes information.
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