Idiomatic Language and Market Communication Risks: How "Let the Cat Out of the Bag" Reveals Hidden Dangers in Corporate Transparency

Corporate communication is a high-stakes game of precision. Yet, idiomatic language-phrases like "let the cat out of the bag" or "off to a strong start"-can obscure meaning, erode investor trust, and trigger stock valuation volatility. These linguistic quirks, often deployed to manage expectations or mask uncertainty, carry hidden risks. The case of Assurant Inc., a global insurance and healthcare services provider, offers a compelling lens to examine how such language shapes market perceptions and investor behavior.

The Cost of Ambiguity: Assurant's Historical Scandals

Assurant's history is marked by episodes where opaque communication exacerbated investor skepticism. In 2010, the company faced a reputational crisis after reports questioned its practices in force-placed insurance-a policy sold without customer consent. Shares plummeted 17% in a single day as investors reacted to the perceived lack of transparency. Similarly, in 2025, Assurant found itself embroiled in a lawsuit alleging that a rival firm had used stolen trade secrets to build its business. These incidents underscore how corporate scandals, when paired with ambiguous messaging, can amplify market distrust.

Academic research corroborates this dynamic. Studies show that inconsistent or vague corporate disclosures increase information asymmetry, leading to irrational investor decisions such as the disposition effect-selling winners too soon and holding losers too long. During crises, delayed or contradictory communication further compounds uncertainty, often triggering sharp stock declines.

The Power of Clarity: Assurant's Recent Turnaround

In contrast, Assurant's recent performance highlights the benefits of clear, data-driven communication. During Q2 2025, the company reported an EPS of $5.56, far exceeding the forecasted $4.50, and its stock surged 1.94% in premarket trading. CEO Keith Demmings attributed the success to "outperformance in Global Housing and expansion in Global Lifestyle," avoiding vague metaphors and instead emphasizing concrete metrics. Analysts responded by raising price targets to the mid-$240s, reflecting renewed confidence in the company's ability to navigate macroeconomic headwinds like inflation and tariffs.

This clarity stands in stark contrast to the 2010 scandal, where Assurant's defensive tone and lack of transparency fueled investor panic. The lesson is clear: when companies align their messaging with factual, actionable insights, they foster trust and stabilize valuations.

The Academic Link Between Language and Valuation

Research on corporate transparency reveals a direct correlation between communication style and investor sentiment. For instance, a 2025 study found that firms using "extreme language" (e.g., superlatives or metaphors) in earnings calls saw heightened trading volume and analyst forecast revisions. Conversely, ambiguous phrases like "due to evolving tariff policies" (used by 46% of U.S. corporations in 2025) signal instability, often leading to reputation declines and valuation erosion. The phrase "let the cat out of the bag"-implying an unexpected revelation-aptly captures the risks of unanticipated disclosures. When companies inadvertently or deliberately "let the cat out," as in Assurant's 2010 scandal, the fallout is swift. Investors, already wary of information asymmetry, react punitively, driving down stock prices.

Broader Implications for Investor Behavior

The interplay between language and trust extends beyond individual firms. In international markets, transparency mitigates herding behavior among funds, particularly in developing economies. For example, during the 2020–2025 period, companies that suspended financial guidance due to tariff uncertainty faced investor skepticism, as ambiguous communication failed to address underlying risks. This trend mirrors the early pandemic era, when firms withholding guidance signaled instability, further eroding trust.

Moreover, AI-driven corporate communications, while efficient, introduce new risks. Overreliance on automated messaging can lead to tone-deaf or inconsistent disclosures, as seen in Coca-Cola's controversial holiday ad. Such missteps highlight the need for human oversight in crafting investor-facing language.

Conclusion: The Path to Trust

For investors, the takeaway is clear: idiomatic language and ambiguous corporate communication are not mere stylistic choices but strategic risks. Assurant's contrasting experiences-2010's opacity versus 2025's clarity-demonstrate how transparency can either erode or reinforce trust. As markets grow increasingly complex, companies must prioritize precision in messaging, avoiding the pitfalls of "letting the cat out of the bag" through poor communication.

In an era where investor sentiment and corporate transparency are inextricably linked, the cost of miscommunication is no longer just reputational-it's financial.