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

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.

Quantifying the impact of language on the performance of international accounting students: A cognitive load theory perspective

“…The feedback and supporting evidence of EFL international students' language-related learning difficulties in AU's accounting program echoes the learning issues of EFL learners reported in prior studies (Al Haddad, Mohamed & Habshi, 2004;Liang & Mohan, 2003;Holthoff et al, 2015;Yang, 2012). For example, the study by Evans and Morrison (2011, p.203) documented language related difficulties perceived by EFL students from an English-medium university based in Hong Kong.…”

“…Prior studies (e.g. Holthoff, Hoos & Weissenberger, 2015;Li et al, 2010) reveal that cognitive academic language proficiency (CALP, Cummins, 2000) plays a crucial role for international students in completing their studies in English-based institutions. CALP refers "to the degree to which an individual has access to and expertise in understanding and using the specific kind of language that is employed in educational contexts and is required to complete academic tasks" (Cummins, 2000, p.55).…”

Interlingual translation of the International Financial Reporting Standards as institutional work

“…An emerging body of literature considers translation to be a potential barrier to transnational accounting harmonisation (Baskerville & Evans, 2011;Dahlgren & Nilsson, 2012;Doupnik & Richter, 2003;Evans et al, 2015;Hellmann et al, 2010;Nobes, 2006Nobes, , 2013Sunder, 2011;Zeff, 2007). Some scholars point out that translation might change the intended meaning of a regulation, which, in turn, might hinder transnational harmonisation of accounting practices (e.g., Dahlgren & Nilsson, 2012;Holthoff, Hoos, & Weissenberger, 2015;Nobes, 2006Nobes, , 2013Sunder, 2011). The…”

Language, translation and accounting: towards a critical research agenda

“…Gendron and Humphries, 2015;Holthoff et al, 2015;Komori, 2015; see also below). As argued by Evans et al (2015, p. 27), "[i]f discourse is predominantly in English, lack of English language competency has practical, academic, social, and status implications".…”

“…On the other hand, however, the language in which we learn affects cognition and information processing. This, in turn, affects performance and academic achievement (Holthoff et al, 2015). Based on prior research and their own investigations, Holthoff et al (p. 120) argue that particularly important for countries in which students start their studies with a low level of English language skills".…”