Time Encoding in Languages and Investment Efficiency

Management Science, Forthcoming

56 Pages Posted: 8 Jan 2020

See all articles by Jaehyeon Kim

Jaehyeon Kim

Ajou University

Yongtae Kim

Santa Clara University - Leavey School of Business

Jian Zhou

University of Hawaii at Manoa

Date Written: November 29, 2019

Abstract

Linguistics research shows that languages differ as to how they differentiate future from present events. Economics research finds that when the grammatical structure of a language disassociates the future from the present, speakers of the language also disassociate the future from the present in their behaviors. This study examines how linguistically induced time perception relates to cross-country variation in investment efficiency. We find that underinvestment is less prevalent in countries where there is a weaker time disassociation in the language. The results from both a within-country analysis based on firms headquartered in different regions of Switzerland and an analysis based on the birthplace information of US firms’ CEOs confirm the relation between languages and investment efficiency. Collectively, the results suggest that time encoding in languages influences speakers’ cognition and their investment decisions.

Keywords: Languages, linguistics, time encoding, future time reference, investment efficiency

Suggested Citation

Kim, Jaehyeon and Kim, Yongtae and Zhou, Jian, Time Encoding in Languages and Investment Efficiency (November 29, 2019). Management Science, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3495863

Jaehyeon Kim

Ajou University ( email )

Korea, Republic of (South Korea)

Yongtae Kim (Contact Author)

Santa Clara University - Leavey School of Business ( email )

500 El Camino Real
Santa Clara, CA California 95053
United States
(408) 554-4667 (Phone)
(408) 554-2331 (Fax)

Jian Zhou

University of Hawaii at Manoa ( email )

Honolulu, HI 96822
United States

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