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Language barriers in analyst reports

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  • Miwa, Kotaro

Abstract

This study explores whether language barriers affect investors’ reactions to textual information in analyst reports. To this end, we compare the price reaction to the linguistic tone in Japanese and U.S. reports and analyze the effect of an English translation on that reaction. We find that prices react significantly to the linguistic tone in both Japanese and U.S. reports. However, we only observe a statistically significant price underreaction to Japanese reports. Further, the existence of an English translation mitigates this price underreaction. These findings support the view that language barriers induce investors to underreact to textual information.

Suggested Citation

  • Miwa, Kotaro, 2021. "Language barriers in analyst reports," International Review of Economics & Finance, Elsevier, vol. 75(C), pages 223-236.
    • Handle: RePEc:eee:reveco:v:75:y:2021:i:c:p:223-236
    DOI: 10.1016/j.iref.2021.03.004
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    Cited by:

    1. Miwa, Kotaro, 2023. "Divergent opinions on social media," International Review of Economics & Finance, Elsevier, vol. 86(C), pages 182-196.
    2. Miwa, Kotaro, 2022. "The informational role of analysts’ textual statements," Research in International Business and Finance, Elsevier, vol. 59(C).
    3. Hitoshi Iwasaki & Ying Chen & Jun Tu, 2023. "Topic tones of analyst reports and stock returns: A deep learning approach," International Review of Finance, International Review of Finance Ltd., vol. 23(4), pages 831-858, December.

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    More about this item

    Keywords

    Language barrier; Financial analyst; Textual analysis; Linguistic tone;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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