Causes and consequences of linguistic complexity in non-U.S. firm conference calls
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: 2012
Place of publication: Boston ]
Language: eng
Number of pages: 54
Description: We examine the determinants and capital market consequences of linguistic complexity in conference calls held in English by non-U.S. firms. We find that linguistic complexity is positively associated with the language barrier in the firms' home country. Also, linguistic complexity in firms' conference calls affects the extent to which the capital market reacts to the information releases. Firms with more linguistic complexity in their conference calls show less trading volume and price movement following the information releases, after controlling for the actual earnings news. Further, the capital market's response to linguistic complexity is more pronounced when there is greater implicit (as captured by the presence of foreign investors) or explicit (as captured by how actively analysts ask questions) demand for the English conference calls. This suggests that the form in which financial information is presented can impose additional processing costs by limiting investors' ability to interpret the reported financials.
Notes: "October 2012" -- Publisher's website.

Includes bibliographical references (pages 36-39).