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Interpretation of probability expressions in accounting: The effects of frame switching

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  • Huerta, Esperanza
  • Petrides, Yanira
  • Braun, Gary P.

Abstract

We report the results of an experiment that examines the interpretation of probability expressions included in the International Financial Reporting Standards by bicultural individuals. In particular, we examine the impact of a phenomenon known as frame switching, which occurs when the thinking processes of bicultural individuals are influenced by the language they use. We compared the interpretation of participants from two distinct cultures (Americans and Mexicans) and from participants who share both cultures (Mexican-Americans). We find, consistent with the expected effects of frame switching, that the interpretations of probability expressions by Mexican-Americans were influenced by the language in which they read the standards. The responses of Mexican-Americans reading the standards in Spanish tended toward those of Mexicans; whereas the responses of Mexican-Americans reading the standards in English tended toward the interpretations of Americans.

Suggested Citation

  • Huerta, Esperanza & Petrides, Yanira & Braun, Gary P., 2016. "Interpretation of probability expressions in accounting: The effects of frame switching," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 27(C), pages 1-12.
    • Handle: RePEc:eee:jiaata:v:27:y:2016:i:c:p:1-12
    DOI: 10.1016/j.intaccaudtax.2016.06.001
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    References listed on IDEAS

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    1. Doupnik, Timothy S. & Riccio, Edson Luiz, 2006. "The influence of conservatism and secrecy on the interpretation of verbal probability expressions in the Anglo and Latin cultural areas," The International Journal of Accounting, Elsevier, vol. 41(3), pages 237-261.
    2. Huerta, Esperanza & Petrides, Yanira & Braun, Gary P., 2013. "Translation of IFRS: Language as a barrier to comparability," Research in Accounting Regulation, Elsevier, vol. 25(1), pages 1-12.
    3. David Luna & Torsten Ringberg & Laura A. Peracchio, 2008. "One Individual, Two Identities: Frame Switching among Biculturals," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 35(2), pages 279-293, March.
    4. Doupnik, Timothy S. & Richter, Martin, 2003. "Interpretation of uncertainty expressions: a cross-national study," Accounting, Organizations and Society, Elsevier, vol. 28(1), pages 15-35, January.
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    Cited by:

    1. Jerzy Gierusz & Katarzyna Kolesnik & Sylwia Silska Gembka, 2019. "The Interpretation of "in Context" Verbal Probability Expressions Used in International Financial Reporting Standards - Evidence from Poland," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2019(1), pages 25-45.
    2. Prather-Kinsey, Jenice & Boyar, Scott & Hood, Anthony C., 2018. "Implications for IFRS principles-based and US GAAP rules-based applications: Are accountants’ decisions affected by work location and core self-evaluations?," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 32(C), pages 61-69.
    3. Zhang, Yuqian & De Zoysa, Anura & Cortese, Corinne, 2023. "Foreign language effect in accounting uncertainty expressions: Interpretation and probabilistic estimation," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 50(C).

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