I have the following advice: Write simple sentences, in an active voice, and present tense if possible.
This advice may not work under all circumstance, but it is a useful start for a non-native speaker. Simple sentences avoid issues that required more knowledge of grammar. However, a text of only simple sentences may become somewhat boring in the end. If you want to write a compound sentence, think about the principle of attention loss, so it is wise to start with the most important stuff.
Consider the following sentence (part of a methodology discussion):
Furthermore, since I am investigating the returns of portfolios comprised majority of European stocks I use the 10-year German Bund yields as the risk-free rate of return.
I recommend to rewrite this as follows, and change the order because the choice of the risk-free rate is the main message for the reader:
I use the ten-year German Bund yield as the risk-free rate because the portfolio consists largely of European stocks.
Equations can be presented in the text as (1) an inline or (2) a separately formatted element. In any case, mathematical symbols should be presented in italic, and the equations should be consecutively numbered. The equation number should be presented in bracket at the right hand side of the equation.
See the example below for the use of an euqation as a seperate text element. The mathematical symbols are explain right after the equation. Also notice the comma after the equations and the fact that “where” is spelled without a capital: the equation together with the explanation is treated as a single sentence.
Common mistakes with equations and symbols are the inconsistent use of mathematical symbols. This often happens because the write takes his/her inspiration from different sources using different symbols. So check that S is always used for the same underlying concept, and that the same underlying concept is always identified by the same symbol.
The devil is in the details. When using numbers in your thesis, there are several important conventions. These conventions make the numbers esier to read and avoid misunderstandings.
When presenting small numbers in the text, it is custom to write them in text as well. Larger numbers (typically above 20) should be written as number. For instance: “There are eleven participants in the survey. They earn on average 20,000 USD per annum”.
Mind the number of significant digits. It is best to keep the number of digits at 3 or 4. This facilitates easy reading. For in stance, don’t present the number 0.0076584739, but round it to 0.00766 or 0.77%. If this number refers to a unit of measurement such as gram, it is even better to write 7.65 mg. By doing this, you the reader is able to see difference between the numbers more easily.
Mind the decimal point. In English texts, your interest rate would be 8.5%, while in the rest of Europe it would be 8,5%. In a similar way, you would earn 20.000 Euro in mainland Europe but 20,000 GBP in the UK or the US. Doing this wrong and may lead to serious misunderstandings.
Proper referencing is important in academic writing. You should know when to use references and how implement the references in a text.
When do you need a reference?
How to implement references
There are many reference styles used in practices. Most journals have their own individual reference style, so the main issue is to chose a reference style and next to implement. In my practice, I often refer to the Journal of Financial Economics reference style.
Most reference styles make use of the Orwell (1984) type of reference: the name of the author followed by the year of the publication in round brackets.
At the end of the thesis, you will present all these references together in one list with the details of each publication. Depending on the reference style, this includes the last name of author, first name(s) or initials, title of the publication, name of the journal, volume number, issue number, and page numbers. There are also specific rules on how to present books, working papers and website in the reference list.
While the style of choice is at the discretion of the writer (actually the publisher), consistency is the main thing to be aware of and the devil is in the details:
Consider the following example of a part of a reference list:
Asquith, P., R. Bruner, and D. Mullins, Jr., 1987, “Merger Returns and the Form of Financing,” Harvard University Working Paper Bowman, Robert G., 2006 ‘Understanding and conducting event studies’ Journal of Business Finance & Accounting, Vol. 10, No.4, pp. 561-581. Corrado, C. J. 1989. A nonparametric test for abnormal security-price performance in event studies. Journal of Financial Economics, 23(2), 385–395.
This example of a reference list contains several inconsistencies (list may not be exhaustive):
While the second and the third conclude with a point (.), the first does not.
The year in the firs reference is followed by a comma, the second is concluded with nothing, and the third is concluded with a point.
The first and the third references have initials of the authors, while the second reference has first names.
The first reference has double hyphens (“), the second reference has single hyphens (‘) and the third reference has no hyphens.
The second and the third reference use different ways to present volume and issue numbers
The second and third reference use different ways to present page numbers.
The first reference uses capitals to start each single noun in the title, while the second and third reference do not have this.
Discussions about writing style are highly subjective, subject to fashion and change over time. I am in favor of a simple and functional writing style, inspired by the way economists and journalists like to write. While there are many websites, books and articles on how to write, John Cochrane’s “Writing tips for PhD Students” gave me the best inspiration.
In many sciences, the writer tries to create an air of objectivity by distancing him or herself from the text. This often leads to lengthy sentences in a passive voice that are difficult to comprehend. In economics (and finance) a more active writing style is custom.
I use the following guidelines:
start with the most important issues, and then motivate it afterwards. A very nice and famous example of this writing style is Hofstede (1980).
write using an active voice, and present tense as much as possible.
read your own text sentence by sentence to see whether it is possible to rewrite it shorter and simpler while retaining its intended meaning.
use clear definitions of key concepts identified consistently using the same term to avoid synonyms that may confuse the reader.
I will give my feedback by annotating the (draft) thesis by using a set of symbols (abbreviations) that I list below. Please us line distance 1.5 to facilitate me in providing feedback. The symbols will be encircled in the thesis. I will provide a brief explanation of each symbol and abbreviation. If available, I will also link the specific annotation to the blog entry with a detailed elaboration.
You have to many text elements that deal with structure. In many cases, these element are not necessary. For instance, to write as the first line of a section titled ‘Results’: This section presents the results of this resarch. This is an abundant sentence: what else would you want to present in a section with the title ‘Results’.
You have too many sublevels in the section numbering.
References Incomplete (some references in the main text may not appear in the reference list and/or some references in the references list are not referred to from the main text.
Reference missing. I make this comment usually when a reference is needed to support a statement or an argument.
You copied parts of another work. You may have violated copyrights or plagiarism standards. This can happen when you copy complete parts of a text, figures or tables from another work withour permission of the author (copyright) or reference (plagiarims)
Tables, figures, equations and numbers
Error against number formatting: US vs EU decimal separator
Perhaps the most important aspect of writing a thesis is its structure. Structure is everywhere in the thesis and it is sometimes difficult to identify or define. In essence, it is the organizing principle of the text. You can compare it with the way you organize your books. If you are a very badly organized person, your books will most probably be lying on the floor, stacked randomly in irregular piles. In your quest to become more organied, you might want to buy a set of bookshelves. This will tidy up your room, and you can see all books and their titles from one viewing point. This is the more visible part of structuring. It is a big step forward.
Yet, with many books, buying bookshelves may not be enough. You will probably add more structure to your library, for instance by dedicating sections of your bookshelves to your science fiction books, study books, reference works, etc.. When your library is large enough, you may even want to order them in alphabetical order, add an index system with keywords linked to specific titles, etcc. These are more hidden way to structure your text. The more aesthetically oriented book owner may even consider to sort his or her books based color, but this is not very functional if you actually want to find a book.
In a way, structuring a thesis works similar to organizating your book collection. The structure in the book collection makes it easier to find books, while the structure in the thesis makes the text easier to read. The reason that the text becomes easier to read is because your text becomes predictable: You don’t start talking about the details of data collection in the introduction, or introduce a complete new explanation in the conclusion. The reader needs to be served as if he or she is in a restaurant: start with an aperitif, then a starter, next the main course, don’t forget about the dessert and of course the coffee at last. In other words, the main structure is predictable.
As a writer you have a large responsibly in keeping the reader engaged in your text. Structure is a way of creating predictability in the text. Readers don’t like too much uncertainty.
The first obvious way to structure a thesis is with sections and section titles. If you write a thesis with less than twenty pages, it is usually sufficient to have one level of section numbering. The typical titless will depend on the nature of your research field, the methodology iused, etc.. For a typical Finance thesis, reporting on an empirical research project, the following sections are likely to be sufficient for a thesis up to 25-30 pages:
Results and discussion
While this structure is somewhat boring, remember that you are not in the business writing a crime thriller. Too much structure is also a killer. For instance, it may be acceptable to have two levels in the section number (2.1 Early Literature, 2.2 Literature), but three levels in a document of 25-30 pages is really too much. What is the argument against so many subsections? Let me start about the positive side of using subsections: it makes it much easier to find particular elements back. However, the downside is that each time you add in a section, subsection, sub-sub section, you disrupt the flow of the reader. Compare it to a restaurant: rather than serving the main course in one go, it is like serving the meet, the potatoes, the vegetables, salt., pepeer, and the gravy seperately. By serving you all these items seperately, the waiter not only interrupts you on a minute-by-minute basis, the composition of the meal also gets lost.
There are many ways to write an introduction, in particular for an experienced writer. My recommendation here is focused on the beginner, the research or student who writes his first or second thesis. A good begin is to plan the subsection that you want in your introduction:
start with introducing and describing the topic. This can be done in many way, for instance by defining the topic, describing a relevant case, news article, presenting statistics on the topic’s relevance, etc. You can reserve one, two or three pragrahps for this.
Next you start descriping the problem associated with topic. This problem statement should fit well with the research objective / research question that you are going to present next. It is usefull in include references here. The problem statement is the core of your introduction. It can take several paragraphs.
In the end your problem statement needs to be followed by a research question or a research objective. While the problem statement is a discussion of a broader problem, the research question is specific and presents your contribution to the solution of the problem. One paragraph may be enough
A preview of your research. Briefly mention the data and method that you are going to use.
Relevance of your work. A discussion of the relevance of your work and its contribution to the academic research and/or the practical relevance. One or two paragraphs.
For instance, your topic could be about mergers and acquisitions. So your first two paragrahs could define what a merge and/or acquisition, what the size of the market is, etc.. Then you could continue with a discussion of the relevance of a merger for shareholder value: it might be destructive becaus it create unmanageable conglomorates or it might create shareholder value. Don’t forget to add in references here. Perhaps one of the reseasons that people disagree about this is because some mergers are done with the idea of cost-cutting, whilst others are directed towards an expansion of markets. You research question may then become: Do cost-cutting mergers increase shareholder value relative to mergers focused on expansion?
The example here is nothing more than a sketch, so in the end it needs to become convincing because of your (strong) arguments. The introduction is really important, it needs to be carefully written because it contains the motivation of your study.
I am a supporter of the idea to invest in companies that are present in your local neighborhood. This is idea is not very new. For instance the Beardstown Ladies was a group of sixteen ladies of age who started investing with a mere amount of 1,600 USD. They gained a lot of attention in the 1990s with their investment approach based on a very down-to-earth philosophy. According to Buffy Tillitt-Pratt, one of the ladies: “We like to invest in things that we know, and things that we understand, but we also have to look at the numbers too”. They bought for instance stocks of firms that made products they owned themselves (rubber boots, cars) and in shops they new.
While the returns of the Beardstown Ladies were rather overstated, in the end their return wasn’t that bad at all and in 2016 their portfolio was reported to be 450,000 USD. Critics claimed that an investment in an index fund would have yielded a higher value. Perhaps this is true, but by investing in what you know, your remain more motivated to remain loyal to your investment strategy. Most likely, the ladies would never have started investing if they would have to be invested in an index fund.
Apart from buying stocks based on familiarity, you could also chose to invest in stocks that are active in your proximity. Suppose that you are a citizen of Drenthe, Friesland, and Groningen and you want to invest in stocks in the neighborhood, how would you start? My idea would be to invest in stocks of firms that employ people in the region. So a good start would be to collect some of the larger listed employers in the region, as presented in the table below:
Name of stock
Some listed employers in Drenthe, Friesland and Groningen
This list presents firms with more than 800 employees working in one of the three Northern provinces. Many firms represent consumer brands (MacDonald, Philips, Vodafone), were others are very visible as many consumers profit from their services such as Ahold Delhaize (Albert Heijn), NL Post, ING, KPN, Vodafone (Ziggo). A few are less visible: Aegon runs a large office in Leeuwarden and one in Groningen (TKP Pensioen), Teijin is active in Chemicals and Melrose (former activities of Fokker). Based on the list, any investor could create his or her own portfolio of regionally active stocks.
In the past two decade we have experienced a rather dramatic change in the way that households invest. Fuelled by a lot of bad press on active management and the skills of banks and asset managers, many have decided to disengage from stocks market investing and switch to a standard savings account, mutual funds and index funds. Obviously, the global financial crisis of 2007/2008 had a lot to do with this too. In 2020 and 2021, the COVID19 crisis kept a lot people at home, reengaging them with stock markets. Some of them started chasing stocks such as GameStop motivated by boredom or protest against the evil of hedge funds.
Unfortunately, this leads to a disconnect between the typical citizen and the financial markets. Few people understand the true contribution of fianncial markts to society, as a means of allocating investments to valuable projects and as a means of facilitating cooperation between people with small savings how do not know each other. Many people lost their trust in financial markets, mostly as a result of the many scandals in the previous two decades.
In this blog, I like to draw the attention to one often ignored reason: the strong focus on individual returns in combination with the anonymity of investments. It is of course difficult to deny that the main motive for investing is financial returns. However, money itself doesn’t create wellbeing, but the way it is spend may have a big impact. As an example, most of us would appreciate a carefully selected personal birthday gift over a check. This also applies to investing. Probably the only benefits of investing in the MSCI Global Large Cap Equity Index are its financial returns and perhaps the idea that you have not been ripped off by a greedy asset manager. There will be little affection in your decision to buy this index.
For this reason, it is understandable that investors increasingly choose for socially responsible investments. Yet, many socially responsible investment funds are spread across the globe, and give the investor little more than the idea of doing well without knowing what it actually means. Globalization provided the world with economic growth, but made it difficult for the individual human being to understand and belief in the system that generates wealth. It has become abstract and far away, resulting in rising populism and focusing on the home country. Donald Trump got elected on his theme ‘Make America great again’, yellow vests crowd the streets of France, the people of Great Britain opted for Brexit, and so on.
It is important that humans can effectively engage and connect with the systems that support their lives, and one of these systems is the financial system. For this reason I have a very modest proposal that may be helpful. I propose that people can choose an investment portfolio of firms that is active in the local neighbourhood, province, or city. In particular, I propose that such a portfolio would allocate its investments according to the number of people working in the region for the particular firm. Essentially, you invest in firms that employ your neighbour.
There are some practicalities here, but I did some basic checks for the provinces of Groningen, Friesland, and Drenthe in the northern part of the Netherlands, which yielded interesting results. First of all, there are more than 100 companies active in this region that are listed on the stock market. That is sufficient for creating a well diversified portfolio. There are many firms listed on a foreign exchange, and so perhaps the most surprising results is that this regionally oriented portfolio is actually an internationally diversified portfolio. In addition to this, the branches of these firms provide over 20,000 jobs, which provided an additional argument for citizins of the northern part of the Netherlands to invest in this portfolio: Invest in the job of your neighbour!
Of course, my proposal is rather broad and should be investigated further to make it operational. Yes, there are a lot subjective choices. What kind of firms do we want in Groningen? Polluting firms with a lot of employment? Should we focus on the energy transition? But having these discussion on the level of a local investment fund is a lot better than outsourcing them to fund managers in faraway financial centres!