Melbourne Accounting Research Seminar - Pengkai Lin

Pengkai Lin from Singapore Management University will present a MARS seminar.

Topic: Breaking the Language Barriers? Machine Translation Technology and Analysts' Forecasts for Multinational Firms

Abstract: We study the impact of machine translation technology on analysts’ forecasts for multinational firms. Exploiting the staggered rollout of Google Translate’s support to translate foreign languages into English, we find that analysts in the U.S. improve their forecast accuracy for firms with significant business exposure in the corresponding foreign countries. The improvement is stronger for analysts who are less likely to be proficient in the foreign languages and for analysts who lack foreign coverage resources in their brokerage houses. We further show that analysts raise more questions related to affected firms’ foreign exposure during conference calls and incorporate more of foreign economic information into their forecasts for affected firms after the rollout of Google Translate. The collective evidence suggests that machine translation technology aids analysts’ forecasting tasks by lowering their language barriers and reducing their information acquisition and processing costs.

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