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Economic consequences of adopting English for annual reports

Author

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  • Thomas Jeanjean

    (ESSEC Business School)

  • Hervé Stolowy

    (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique)

  • Michael Erkens

    (Computation Institute [Chicago] - University of Chicago)

Abstract

We investigate the economic consequences of increasing financial report visibility, measured by the use of English as a reporting language for firms from non-English-speaking countries. We sample 113 firms that started publishing their annual report in English (in addition to their local language) during 2004-2007 while not cross listing, not joining a major stock index or a stock index that requires external reporting in English and not engaging in major M&A activity. Taking into account the endogeneity of the reporting language, with a difference-in-differences setting and propensity score matching, and controlling for confounding factors, we find that adoption of English in the annual report is associated with lower information asymmetry, greater analyst following and more foreign investors. This suggests that language per se is an attribute of the firm's visibility.

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  • Thomas Jeanjean & Hervé Stolowy & Michael Erkens, 2012. "Economic consequences of adopting English for annual reports," Post-Print hal-00690931, HAL.
    • Handle: RePEc:hal:journl:hal-00690931
    Note: View the original document on HAL open archive server: https://hal.science/hal-00690931
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