Language in Economics and Accounting Research: The Role of Linguistic History

Giorgio Gotti, Seán G. Roberts, Marco Fasan and Cole B. J. Robertson
Additional contact information
Giorgio Gotti: University of Texas Rio Grande Valley, Texas, USA2Ca’ Foscari University of Venice, Italy
Seán G. Roberts: Cardiff University, Cardiff, UK4University of Bristol, Bristol, UK
Marco Fasan: Ca’ Foscari University of Venice, Italy
Cole B. J. Robertson: Radboud University, Nijmegen, Netherlands

The International Journal of Accounting (TIJA), 2021, vol. 56, issue 03, 1-25

Abstract: This paper investigates whether a consideration of linguistic history is important when studying the relationship between economic and linguistic behaviors. Several recent economic studies have suggested that differences between languages can affect the way people think and behave (linguistic relativity or Sapir–Whorf hypothesis). For example, the way a language obliges one to talk about the future might influence intertemporal decisions, such as a company’s earnings management. However, languages have historical relations that lead to shared features—they do not constitute independent observations. This can inflate correlations between variables if not dealt with appropriately (Galton’s problem). We discuss this problem and provide an overview of the latest methods to control linguistic history. We then provide an empirical demonstration of how Galton’s problem can bias results in an investigation of whether a company’s earnings management behavior is predicted by structural features of its employees’ language. We find a strong relationship when not controlling linguistic history, but the relationship disappears when controls are applied. In contrast, economic predictors of earnings management remain robust. Overall, our results suggest that careful consideration of linguistic history is important for distinguishing true causes from spurious correlations in economic behaviors.

Keywords: Institutions; languages; earnings management; linguistic history (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S1094406021500153
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:tijaxx:v:56:y:2021:i:03:n:s1094406021500153

Ordering information: This journal article can be ordered from

DOI: 10.1142/S1094406021500153

Access Statistics for this article

The International Journal of Accounting (TIJA) is currently edited by A. Rashad Abdel-khalik

More articles in The International Journal of Accounting (TIJA) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().