Publication Type
Working Paper
Version
publishedVersion
Publication Date
1-2025
Abstract
We study the impact of machine translation technology on analysts’ forecasts for firms with foreign operations. Exploiting the staggered rollout of Google Translate’s support for translating foreign languages into English, we find that U.S. analysts improve their forecast accuracy for firms with substantial business exposure to the corresponding foreign countries. We obtain similar evidence using an international sample of analysts covering firms outside their home countries. The improvement in forecast accuracy is greater for analysts with limited language skills or brokerage resources to process foreign information. Further analysis suggests that analysts raise more questions about firms’ foreign exposure during conference calls and incorporate more foreign macroeconomic information into forecasts after the rollout of Google Translate. Our findings demonstrate the effectiveness of machine translation technology in reducing language barriers and highlight the complementary role of publicly accessible technology in narrowing performance gaps among financial analysts.
Keywords
Language Barriers, Technology, Sell-Side Analysts, Machine Translation, Complementary Role
Discipline
Accounting | Finance and Financial Management
Research Areas
Financial Intermediation and Information
First Page
1
Last Page
88
Publisher
SSRN
Citation
FANG, Bingxu and LIN, Pengkai.
Breaking the language barriers? Machine translation technology and analysts’ forecasts for firms with foreign operations. (2025). 1-88.
Available at: https://ink.library.smu.edu.sg/soa_research/2070
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4787265&dgcid=ejournal_htmlemail_singapore%3Amanagement%3Auniversity%3Aschool%3Aof%3Aaccountancy%3Aresearch%3Apaper%3Aseries_abstractlink
