The Accounting Review Vol. 91 No. 4 2016
The Capital Market Consequences of Language Barriers in the Conference Calls of Non-U.S. Firms
Abstract
We examine how language barriers affect the capital market reaction to information disclosures. Using transcripts from non-U.S. firms' English-language conference calls, we find that the calls of firms in countries with greater language barriers are more likely to contain non-plain English and erroneous expressions. For non-U.S. firms that hire an English-speaking manager, we find less use of non-plain English and fewer erroneous expressions. Calls with a greater use of non-plain English and more erroneous expressions show lower intraday price movement and trading volume. The capital market responses to non-plain English and erroneous expressions are more negative when the firm is located in a non-English-speaking country and has more English-speaking analysts participating in the call. Our results highlight that, when disclosure happens verbally, language barriers between speakers and listeners affect its transparency, which, in turn, impacts the market's reaction.
- DOI
- 10.2308/accr-51387
- Volume
- 91
- Issue
- 4
- Pages
- 1023-1049
- Language
- en
- Sources
- openalex bibtex:phds-export.bib crossref