cover_pacific-basin-finance-journal.jpg

The Effect of Language on Investing: Evidence from Searches in Chinese Versus English

This study examines the language effect on investing behavior in local stock markets for local- and foreign-language investors using Google search records. First, we find that attention to a local language stimulates attention to a foreign language, increases abnormal news coverage, and has better predictability on stock returns. Second, investors who do Google searches in the local language react faster to a news event's shock than those who search in the foreign language. Third, only attention to the local language can reduce the price drift of an earnings surprise. Last, firm-level information asymmetry is a channel for local advantage. Therefore, we suggest that investors who use a stock market's local language have a local advantage when seeking more profitable investment opportunities in that stock market.

01. June 2021

Authors Hui-Ching Chuang Iftekhar Hasan Yin-Siang Huang Chih-Yung Lin

Whom to contact

For Researchers

Professor Iftekhar Hasan, PhD
Professor Iftekhar Hasan, PhD
Economist

If you have any further questions please contact me.

Request per E-Mail

For Journalists

Mitglied der Leibniz-Gemeinschaft LogoTotal-Equality-LogoSupported by the BMWK