| Abstract: |
We develop an empirical proxy for companies’ differential communication to local and foreign investors using translation differences in public disclosure. We validate this measure with a field experiment that shows that high-translation-difference firms provide less information in response to private inquiries from foreign investors relative to those from local investors. We show that differential communication results in significant information asymmetry between local and foreign investors, as measured with stock illiquidity. It also leads foreign analysts to issue less accurate forecasts than local analysts following the same firm. Last, we use variation in the differential communication related to specific topics to show that differential communication appears to be strategic. Our results highlight the role of differential communication as one driver of local information advantage.
Keywords: Differential Communication; Local Information Advantage; Translation Differences; Financial Disclosure; Information Asymmetry; Textual Analysis; Globalization
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Biography:
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Lorien received a Ph.D. in accounting from the University of North Carolina and a B.S. in Economics from Brigham Young University. She conducts research that examines written communication of financial information through corporate filings and disclosures using linguistics-based research methodologies, as well as research on the intersection of accounting and emerging technologies more broadly. Lorien has presented her research at many conferences in her field and has published in the Journal of Accounting and Economics, the Journal of Accounting Research, Management Science, and Contemporary Accounting Research. Her work has been cited in Bloomberg, CFO Magazine, and the Wall Street Journal.
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