We all know that the world of consumer product packaging has been tried and tested for its effects on us for years (post to come soon “A question of taste”). And the Design Business Association (DBA) is a great resource promoting the powerful business case for the use of design in many areas (see their Design Effectiveness Awards case studies for some astonishing results on the bottom line www.effectivedesign.org.uk).
But now here’s a bit of research which adds fuel to that fire from a different world – the world of finance – and shows that even experienced financial investors, those we may consider as analytical and hard-headed are just as human as the rest of us and are swayed by good looks!
According to researchers from the School of Business Administration at the University of Miami a good looking annual report has a profound effect on how viewers rates the value of the company – placing a higher value on firms with attractive reports. Even though the respondents has said that they thought the design of a companies’ report would be of little importance in their valuation.
The researchers conducted a series of three studies; one with financial students, one with the general public and one with experienced investors. In the study with the experienced investors respondents were asked to rank organisations based on how likely they would be to want to invest in these firms. Interestingly the addition of an extra colour in the annual report seems to have the same impact on the companies ranking as a 20% improvement in revenue from the previous year!
“Better-looking documents produce increased pride of ownership for a company, and this pride increases valuation. People are not aware of the effect of aesthetics on their financial decisions and we found that when their attention was drawn to this issue they were able to overcome the bias and make wiser investments.” said Claudia Townsend, assistant professor of marketing at the University of Miami School of Business Administration, who conducted the research with Suzanne Shu of the UCLA Anderson School of Management.
So if you’re about to produce an annual report you’d better dash out and find yourself a decent designer. Seems that the investment in good looks is ultimately worth while!
Read the full report:
University of Miami. “Handsome annual reports cause investors to value company higher.” ScienceDaily, 23 Aug. 2011. Web. 13 Sep. 2011.