Language Commonality and Sell-Side Information Production

Ruishen Zhang ()
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Ruishen Zhang: Institute of Accounting and Finance, Shanghai University of Finance and Economics, Shanghai 200433, China

Management Science, 2022, vol. 68, issue 6, 4435-4453

Abstract: 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 nonnative languages are used in professional settings.

Keywords: language commonality; dialect; analysts; information production (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (4)

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