'Narrative reversal' is key to telling a great story in books, films and TV shows: Study

Writers and scholars have long debated what makes for a great story, but Samsun Knight wanted to see whether there was a way to empirically determine which stories will be snore fests and which will leave audiences hungry for more.

Using a scientist’s tools, the novelist and economist found that “narrative reversals,” or peripeteias, were the key factor – lots of them and the bigger the better.

Samsun Knight (supplied image)

Commonly known as changes of fortune or turning points, where characters’ fortunes swing from good to bad and vice versa, Knight and his colleagues found that stories rich in these mechanisms boosted popularity and engagement with audiences through a range of media, from television to crowdfunding pitches.

“The best-written stories were always either ‘building up’ a current reversal, or introducing a new plot point,” says Knight, an assistant professor of marketing at the ��߲ݴ�ý’s Rotman School of Management.

“In our analysis, the best writers were those that were able to maintain both many plot points and strong build-up for each plot point across the course of the narrative.”

The research, co-authored with Matthew D. Rocklage and Yakov Bart of Boston’s Northeastern University, was recently published in the journal Science Advances.

For the study, the researchers analyzed nearly 30,000 television shows, movies, novels, and crowdfunding pitches using computational linguistics, a blend of computer science and language analysis. The approach allowed them to quantify not only the number of a reversals in a text but also their degree or intensity by assigning numerical values to words based on how positive or negative they were.

Movies and television shows with more and bigger reversals were better rated on the popular ratings site IMDb. Books with the most and biggest reversals were downloaded more than twice as often as books with the fewest reversals from the free online library Project Gutenberg. And GoFundMe pitches with more and larger reversals were as much as 39 per cent more likely to hit their fundraising goals.

The Greek philosopher Aristotle was the first to identify peripeteia as a key feature of a good story, with Oedipus Rex serving as a classic example. Other thinkers have since added their ideas, including American playwright and dramaturg Leon Katz, whose scholarship particularly inspired Knight’s research.

“[Katz] described the reversal as the basic unit of narrative – just as a sentence is the basic unit of a paragraph, or the syllogism is the basic unit of a logical proof,” Knight says.

In addition to helping psychologists understand how narrative works to educate, inform and inspire people, the findings may also benefit storytellers of all kinds.

“Hopefully our research can help build a pedagogy for writers that allows them to rely on the accumulated knowledge of Aristotle et al. without having to reinvent the wheel on their own every time,” says Knight.

That includes himself. With another novel on the way, he was recently working on a chapter with a big reveal.

“I realized that this drop might hit harder if I gave the character more positive moments before pulling the rug out from under them.”

Two out of three corporate frauds go undetected, research finds

Christopher.Sorensen — Fri, 17 Feb 2023 17:51:14 +0000

Two out of three corporate frauds go undetected, research finds

Christopher.Sorensen Fri, 02/17/2023 - 12:51

Cutline

The collapse of auditing firm Arthur Andersen in connection with the Enron scandal in the early 2000s gave researchers a glimpse of how much corporate fraud was detected during a period of heightened scrutiny (photo by Allan Tannenbaum/Getty Images)

Rotman Staff

Topic

Breaking Research

Research & Innovation

Rotman School of Management

White Collar Crime

For the ��߲ݴ�ý’s Alexander Dyck, corporate fraud is like an iceberg: a small number is visible, but much more lurks below the surface.

But how much more? And at what cost to investors?

Alexander Dyck

Dyck, a professor of finance and economic analysis and policy at the Rotman School of Management, and his team found that under typical surveillance, about three per cent of U.S. companies are found doing something funny with their books in any given year. They arrived at the number by examining financial misrepresentations exposed by auditors, enforcement releases by the U.S. Securities and Exchange Commission (SEC), financial restatements and full legal prosecutions by the SEC against insider trading – all between 1997 and 2005.

However, the freefall and unexpected collapse of auditing firm Arthur Andersen, starting in 2001, due to its involvement in the Enron accounting scandal, gave Dyck and his colleages the chance to see how much fraud was detected during a period of heightened scrutiny.

Arthur Anderson had been working with 20 per cent of all U.S. publicly traded companies. Forced to find new auditors, those companies found themselves under a microscope due to their previous association with the disgraced accounting firm – presenting a “huge opportunity,” Dyck says.

While those companies didn’t show a greater propensity to fraud in the runup to the scandal, it was a different story once the spotlight was turned on between Nov. 30, 2001 – the date when Andersen client Enron began filing for bankruptcy – until the end of 2003. During that period, the new auditors, as well as regulators, investors and news media, were all looking much more closely at the ex-Andersen companies.

“What we found was that there was three times as much detected fraud in the companies that were subjected to this special treatment, as a former Andersen firm, compared to those that weren’t,” says Dyck, who holds the Manulife Financial Chair in Financial Services and is the director of the Capital Markets Institute at the Rotman School.

The researchers, which included Adair Morse of the University of California, Berkeley and Luigi Zingales of the University of Chicago, used the findings to infer that the real number of companies involved in fraud is at least 10 per cent – about three times greater than their previous estimates. That squares with previous research that has pegged the true incidence of corporate fraud between 10 and 18 per cent. While the researchers were looking at U.S. companies, Dyck speculated that the ratio of undetected-to-detected fraud is not significantly different in Canada.

The findings were published in the Review of Accounting Studies. Dyck is scheduled to present his research during an event hosted by the Capital Markets Institute on Feb. 23.

The researchers estimate that fraud destroys about 1.6 percent of a company’s equity value – mostly due to diminished reputation among those in the know, representing about $830 billion in current U.S. dollars.

The figures also help to quantify the value of regulatory intervention, such as the Sarbanes-Oxley Act, or SOX, introduced in 2002 in response to Enron and other financial scandals. The study shows the legislation would satisfy a cost benefit analysis even if it only reduced corporate fraud by 10 per cent of its current level.

The results should capture the attention of anyone with responsibility for corporate oversight and research, Dyck says.

“I spend a lot of time running a program for directors of public corporations and I tout this evidence when I say, ‘Do I think you guys should be spending time worrying about these things? Yes. The problem is bigger than you might think.’”