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http://ssrn.com/abstract=2154948
 
 

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Capital Market Consequences of Linguistic Complexity in Conference Calls of Non-U.S. Firms


Francois Brochet


Boston University - Department of Accounting

Patricia L. Naranjo


Rice University

Gwen Yu


Harvard Business School

September 28, 2013

Harvard Business School Research Paper No. 2154948

Abstract:     
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. Our results highlight that when disclosure takes the form of verbal communication, the complexity in the narrative impacts the market reaction to the disclosure.

Number of Pages in PDF File: 54

Keywords: Complexity, Voluntary disclosure, Capital market consequences, Non-plain English

JEL Classification: G14, G15, M41

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Date posted: October 3, 2012 ; Last revised: November 23, 2013

Suggested Citation

Brochet, Francois and Naranjo, Patricia L. and Yu, Gwen, Capital Market Consequences of Linguistic Complexity in Conference Calls of Non-U.S. Firms (September 28, 2013). Harvard Business School Research Paper No. 2154948. Available at SSRN: http://ssrn.com/abstract=2154948 or http://dx.doi.org/10.2139/ssrn.2154948

Contact Information

Francois Brochet
Boston University - Department of Accounting ( email )
595 Commonwealth Avenue
Boston, MA 02215
United States
Patricia L. Naranjo
Rice University ( email )
6100 South Main Street
McNair Hall - Room 343
Houston, TX 77005-1892
United States
7133485386 (Phone)
Gwen Yu (Contact Author)
Harvard Business School ( email )
Soldiers Field Road
Morgan 383
Boston, MA 02163
United States
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