International evidence on the impact of adopting English as an external reporting language

• 成果类型: Article
• 署名作者: Jeanjean, Thomas; Stolowy, Herve; Erkens, Michael; Yohn, Teri Lombardi
• 署名单位: ESSEC Business School; Hautes Etudes Commerciales (HEC) Paris; Indiana University System; IU Kelley School of Business; Indiana University Bloomington
• 刊物名称: JOURNAL OF INTERNATIONAL BUSINESS STUDIES
• ISSN/ISSBN: 0047-2506
• DOI: 10.1057/jibs.2014.33
• 发表日期: 2015
• 页码: 180-205
• 关键词: english; language (language design; silent language; translation); annual report; foreign ownership; information asymmetry; analyst following

摘要

This study investigates the economic consequences of non-English-speaking companies adopting English as an external reporting language. We examine a sample of European companies that initiate the voluntary issuance of an annual report in English in addition to the local language annual report. To control for self-selection, we use a difference-in-differences design with a propensity score matched control sample. We find that adoption of English as an external reporting language is associated with increased foreign ownership, decreased information asymmetry, and increased analyst following. We also find that these benefits are not conditional on the use of IFRS for financial reporting. Our findings hold if we run a number of robustness checks to control for correlated events (creation of an investor relations service, provision of conference calls, and/or changes in management). These results are consistent with the language used in the annual report acting as a barrier to investment for some investors and with annual reports issued in English reducing investors' information processing costs.