Really “Lost in translation”? The economic consequences of issuing an annual report in English

Thomas Jeanjean, Hervé Stolowy () and Michael Erkens ()

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Abstract: In this paper, we investigate the economic consequences of using English as an external reporting language for firms from non- English speaking countries. We use a difference-indifferences technique to estimate the effect of language. We use a sample of 166 firms that start publishing an annual report in English in addition to an annual report in their local language. We benchmark these firms to a sample of control firms defined via a propensity score matching procedure to control for endogeneity in the choice of the reporting language. We show that information asymmetry (measured as the bid-ask spread) is reduced, analyst following is enlarged and a greater investor base (measured as a higher number of foreign investors) is attracted. Our findings suggest that language per se may contribute to an increase in market efficiency by providing information accessible to more market participants.

Keywords: annual report; economic consequences; translation; English; bid-ask spread; analyst following; foreign ownership; difference-indifferences; propensity score matching.; rapport annuel; conséquences économiques; traduction; anglais; fourchette de prix; suivi des analystes; actionnariat étranger; différences dans les différences; score de propension. (search for similar items in EconPapers)
Date: 2010-05-10
Note: View the original document on HAL open archive server: https://hal.science/hal-00479511
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Published in Crises et nouvelles problématiques de la Valeur, May 2010, Nice, France. pp.CD-ROM

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00479511

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