The Capital Market Consequences of Language Barriers in the Conference Calls of Non-US Firms

• 成果类型: Article
• 署名作者: Brochet, Francois; Naranjo, Patricia; Yu, Gwen
• 署名单位: Boston University; Rice University; Harvard University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-51387
• 发表日期: 2016
• 页码: 1023-1049
• 关键词: ANNUAL EARNINGS ANNOUNCEMENTS; information-content; voluntary disclosure; Investor protection; READABILITY; complexity; management; english; price; environment

摘要

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.