Capital market consequences of linguistic complexity in conference calls of non-U.S. firms
By: Francois Brochet, Patricia Naranjo, Gwen Yu
Contributors: Yu, Gwen; Harvard Business School
Series: Working paper / Harvard Business School -- 13-033; Working paper (Harvard Business School) -- 13-033
Publisher: Harvard Business School
Published: 2013
Place of publication: Boston]
Language: eng
Number of pages: 56
Work titles: Causes and consequences of linguistic complexity in non-U.S. firm conference calls
Description: We examine how linguistic complexity affects the capital market reaction to information disclosures. We define linguistic complexity as the use of non-plain English stemming from language barriers. Using transcripts from the English-language conference calls of non-U.S. firms, we find that linguistic complexity is positively associated with the language barriers in the firms' home country. We then show that conference calls that are more linguistically complex show lower price movement, lower trading volume, and more dispersion in analyst forecasts following the calls. Further, the capital market's response to linguistic complexity is limited to firms for which there is greater demand for English-language conference calls. Our results highlight that when disclosure takes the form of verbal communication, the complexity in the narrative impacts the market reaction to the disclosure.
Notes: "October 2012. (Revised August 2013.)"--Publisher's Web site.

Revision of Causes and consequences of linguistic complexity in non-U.S. firm conference calls.

Includes bibliographical references (pages 37-40).