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Foreign language effect in accounting uncertainty expressions: Interpretation and probabilistic estimation

Author

Listed:
  • Zhang, Yuqian
  • De Zoysa, Anura
  • Cortese, Corinne

Abstract

The foreign language effect, or thinking in a foreign language, reduces judgment bias under uncertainty. This study investigates how language use (native versus foreign) affects accounting judgment on uncertainty expressions. We conducted two separate experiments: between-subjects and within-subjects, both of which included tasks requiring interpretations and probability estimations based on accounting standard uncertainty expressions. The results demonstrated that foreign language use affected the interpretation of uncertainty expressions and reduced judgment bias in probability estimation, particularly in the context of asset recognition. These findings have important implications for accounting research and reporting.

Suggested Citation

  • Zhang, Yuqian & De Zoysa, Anura & Cortese, Corinne, 2023. "Foreign language effect in accounting uncertainty expressions: Interpretation and probabilistic estimation," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 50(C).
    • Handle: RePEc:eee:jiaata:v:50:y:2023:i:c:s1061951823000071
    DOI: 10.1016/j.intaccaudtax.2023.100528
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    More about this item

    Keywords

    Foreign language effect; Uncertainty expressions; Probability estimation; Accounting judgement; Interpretation;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions

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