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

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Author Info

  • Thomas Jeanjean

    ()
    (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - GROUPE HEC - CNRS : UMR2959)

  • Hervé Stolowy

    ()
    (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - GROUPE HEC - CNRS : UMR2959)

  • Michael Erkens

    (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - GROUPE HEC - CNRS : UMR2959)

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.

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Bibliographic Info

Paper provided by HAL in its series Post-Print with number hal-00479511.

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Date of creation: 2010
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Publication status: Published - Presented, Crises et nouvelles problématiques de la Valeur, 2010, Nice, France
Handle: RePEc:hal:journl:hal-00479511

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Keywords: rapport annuel; conséquences économiques; traduction; anglais; fourchette de prix; suivi des analystes; actionnariat étranger; différences dans les différences; score de propension.;

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