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


Accounting in Europe

2015, vol. 12, n°1, pp.107-125

Departments: Accounting & Management Control, GREGHEC (CNRS)

Keywords: Translation, Language, Decision-making

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