Are We Lost in Translation? The Impact of Using Translated IFRS on Decision-Making

Gero Holthoff · Florian Hoos · Barbara E. Weißenberger

30 citations0/0 files storedAccounting in Europe

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Accounting Theory and Financial Reporting Auditing, Earnings Management, Governance Accounting Education and Careers

Abstract

International Financial Reporting Standards (IFRS) are issued in English and subsequently translated into a multitude of languages to make them accessible to non-English-speaking IFRS users. In an international work context, IFRS users apply either the original English version or a translated version of an IFRS standard to input information presented in different languages. While research has reported numerous challenges inherent in IFRS translation, we know very little about the actual impact of using different languages on decision-making. Based on a series of 2 × 2 between-subjects experiments with German students who possessed different levels of accounting knowledge, we investigate the influence of language on decision-making. Our experimental manipulations entail the language of the accounting standard used (English vs. German) and the language of the input case information (English vs. German). Our German participants made decisions about a series of cases relating to IAS 24 Related Party Disclosures. Based on an expert benchmark solution for the cases, we determine the quality of participants’ decisions. We find that the use of IAS 24 in the participants’ mother tongue (German) has a positive impact on decision-making quality. We also find some support for a positive influence of the native language of the input case information relative to English input case information. Moreover, participants’ accounting knowledge and English language skill are positively associated with decision-making quality.

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1975Design and Analysis: A Researcher's Handbook 2017Course in General Linguistics 1959On Linguistic Aspects of Translation 2013Course in General Linguistics 2005Design and Analysis: A Researcher's Handbook 2003Semiotics: The Basics 2006International Financial Reporting Standards (IFRS): pros and cons for investors 1929The Status of Linguistics as a Science

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2019Quantifying the impact of language on the performance of international accounting students: A cognitive load theory perspective 2021Translation of International Financial Reporting Standards and implications for judgments and decision-making 2016Lobbying and Audit Regulation in the EU

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