Language Commonality and Sell-Side Information Production

• 成果类型: Article
• 署名作者: Zhang, Ruishen
• 署名单位: Shanghai University of Finance & Economics
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2021.4059
• 发表日期: 2022
• 页码: 4435-4453
• 关键词: language commonality; dialect; analysts; Information production

摘要

I study the effects of language commonality (i.e., sharing a native language) on information production in financial markets. Using a hand-collected data set on the prevalent dialects for 2,091 cities (counties) in China, I identify the effects of language commonality separately from those of shared hometown and geographic proximity. In in-sample tests, language commonality between analysts and CEOs increases the return of trading on analysts' recommendations by 5.5%. The results mainly stem from less intelligible dialects. Broadly speaking, language commonality can alleviate communication frictions when non-native languages are used in professional settings.