World Scientific
  • Search
    Quick Search in Journals
    Access type:
    Quick Search anywhere
    Access type:
    Advanced Search
  • My Cart
Skip main navigation
Close Drawer MenuOpen Drawer Menu

Cookies Notification

We use cookies on this site to enhance your user experience. By continuing to browse the site, you consent to the use of our cookies. Learn More
×
Our website is made possible by displaying certain online content using javascript.
In order to view the full content, please disable your ad blocker or whitelist our website www.worldscientific.com.

System Upgrade on Tue, Oct 25th, 2022 at 2am (EDT)

Existing users will be able to log into the site and access content. However, E-commerce and registration of new users may not be available for up to 12 hours.
For online purchase, please visit us again. Contact us at [email protected] for any enquiries.
No Access

Language in Economics and Accounting Research: The Role of Linguistic History

    https://doi.org/10.1142/S1094406021500153Cited by:5
    Previous
    Next
    This article is part of the issue:
    A Forum on Replication: A Special Issue

    Abstract

    This paper investigates whether a consideration of linguistic history is important when studying the relationship between economic and linguistic behaviors. Several recent economic studies have suggested that differences between languages can affect the way people think and behave (linguistic relativity or Sapir–Whorf hypothesis). For example, the way a language obliges one to talk about the future might influence intertemporal decisions, such as a company’s earnings management. However, languages have historical relations that lead to shared features—they do not constitute independent observations. This can inflate correlations between variables if not dealt with appropriately (Galton’s problem). We discuss this problem and provide an overview of the latest methods to control linguistic history. We then provide an empirical demonstration of how Galton’s problem can bias results in an investigation of whether a company’s earnings management behavior is predicted by structural features of its employees’ language. We find a strong relationship when not controlling linguistic history, but the relationship disappears when controls are applied. In contrast, economic predictors of earnings management remain robust. Overall, our results suggest that careful consideration of linguistic history is important for distinguishing true causes from spurious correlations in economic behaviors.

    JEL: D83, M41, Z10

    References

    • Alesina, A., & Giuliano, P. [2015] Culture and institutions. Journal of Economic Literature, 53, 898–944. Crossref, Google Scholar
    • Baayen, R. H., Davidson, D. J., & Bates, D. M. [2008] Mixed-effects modeling with crossed random effects for subjects and items. Journal of Memory and Language, 59, 390–412. Crossref, Google Scholar
    • Bates, D., Maechler, M., Bolker, B., & Walker, S. [2015] Fitting linear mixed-effects models using lme4. Journal of Statistical Software, 67, 1–48. Crossref, Google Scholar
    • Berlin, B., & Kay, P. [1991] Basic Color Terms: Their Universality and Evolution. University of California Press. Google Scholar
    • Bickel, B., Nichols, J., Zakharko, T., Witzlack-Makarevich, A., Hildebrandt, K., Rießler, M., Bierkandt, L., Zúñiga, F., & Lowe, J. B. (2017). The AUTOTYP typological databases. Version 0.1.0. Available at https://github.com/autotyp/autotyp-data/tree/0.1.0. Accessed on December 1, 2018. Google Scholar
    • Blute, M., & Jordan, F. [2018] The evolutionary approach to history. In Oxford Handbook of Evolution, Biology, and Society, R. L. Hopcroft (Ed.), pp. 621–642. Oxford University Press. Google Scholar
    • Bouckaert, R. R., Bowern, C., & Atkinson, Q. D. [2018] The origin and expansion of Pama-Nyungan languages across Australia. Nature Ecology & Evolution, 2, 741–749. Crossref, Google Scholar
    • Bouckaert, R. R., Lemey, P., Dunn, M., Greenhill, S. J., Alekseyenko, A. V., Drummond, A. J., Gray, R. D., Suchard, M. A., & Atkinson, Q. D. [2012] Mapping the origins and expansion of the Indo-European language family. Science, 337, 957–960. Crossref, Google Scholar
    • Bowern, C. [2018] Computational phylogenetics. Annual Review of Linguistics, 4, 281–296. Crossref, Google Scholar
    • Bowern, C., & Atkinson, Q. D. [2012] Computational phylogenetics and the internal structure of Pama-Nyungan. Language, 88, 817–845. Crossref, Google Scholar
    • Brochet, F., Miller, G., & Srinivasan, S. [2014] Do analysts follow managers who switch companies? An analysis of relationships in the capital markets. The Accounting Review, 89, 451–482. Crossref, Google Scholar
    • Chacon, T. C., & List, J. M. [2015] Improved computational models of sound change shed light on the history of the Tukanoan languages. Journal of Language Relationship, 13, 177–203. Crossref, Google Scholar
    • Chang, W., Cathcart, C., Hall, D., & Garrett, A. [2015] Ancestry-constrained phylogenetic analysis supports the Indo-European steppe hypothesis. Language, 91, 194–244. Crossref, Google Scholar
    • Chen, J. I., He, T. S., & Riyanto, Y. E. [2019] The effect of language on economic behavior: Examining the causal link between future tense and time preference in the lab. European Economic Review, 120, 103307. Crossref, Google Scholar
    • Chen, M. K. [2013] The effect of language on economic behavior: Evidence from savings rates, health behaviors, and retirement assets. American Economic Review, 103, 690–731. Crossref, Google Scholar
    • Chen, S., Cronqvist, H., Ni, S., & Zhang, F. [2017] Languages and corporate savings behavior. Journal of Corporate Finance, 46, 320–341. Crossref, Google Scholar
    • Clark, H. H. [1973] The language-as-fixed-effect fallacy: A critique of language statistics in psychological research. Journal of Verbal Learning and Verbal Behavior, 12, 335–359. Crossref, Google Scholar
    • Dahl, Ö. [2000] The grammar of future time reference in European languages. In Tense and Aspect in the Languages of Europe, Ö. Dahl (Ed.), pp. 309–328. Berlin: Mouton de Gruyter. Crossref, Google Scholar
    • Djankov, S., La Porta, R., Lopez-de-Silanes, F., & Shleifer, A. [2008] The law and economics of self-dealing. Journal of Financial Economics, 88, 430–465. Crossref, Google Scholar
    • Donohue, M., Wichmann, S., & Albu, M. [2008] Typology, areality, and diffusion. Oceanic Linguistics, 47, 223–232. Crossref, Google Scholar
    • Dunn, M., Greenhill, S. J., Levinson, S. C., & Gray, R. D. [2011] Evolved structure of language shows lineage-specific trends in word-order universals. Nature, 473, 79–82. Crossref, Google Scholar
    • Evans, N., & Levinson, S. [2009] The myth of language universals: Language diversity and its importance for cognitive science. Behavioral and Brain Sciences, 32, 429–448. Crossref, Google Scholar
    • Figlio, D., Giuliano, P., Ozek, U., & Sapienza, P. (2016). Long-term orientation and educational performance. NBER Working Paper No. 22541. Google Scholar
    • Gay, V., Hicks, D. L., Santacreu-Vasut, E., & Shoham, A. [2018] Decomposing culture: An analysis of gender, language and labor supply in the household. Review of Economics of the Household, 16, 879–909. Crossref, Google Scholar
    • Gelman, A., & Pardoe, I. (2004). Average predictive effects for models with nonlinearity, interactions, and variance components. Technical Report, Department of Statistics, Columbia University. Google Scholar
    • Grafen, A. [1989] The phylogenetic regression. Philosophical Transactions of the Royal Society of London. B, Biological Sciences, 326, 119–157. Crossref, Google Scholar
    • Gray, R. D., Drummond, A. J., & Greenhill, S. J. [2009] Language phylogenies reveal expansion pulses and pauses in Pacific settlement. Science, 323, 479–483. Crossref, Google Scholar
    • Green, L., & Myerson, J. [2004] A discounting framework for choice with delayed and probabilistic rewards. Psychological Bulletin, 130, 769–792. https://doi.org/10.1037/0033-2909.130.5.769 Crossref, Google Scholar
    • Grollemund, R., Branford, S., Bostoen, K., Meade, A., Venditti, C., & Pagel, M. [2015] Bantu expansion shows that habitat alters the route and pace of human dispersals. Proceedings of the National Academy of Sciences of the United States of America, 112, 13296–13301. Crossref, Google Scholar
    • Guin, B. (2016). Culture and household saving. SSRN Paper. Available at http://dx.doi.org/10.2139/ssrn.2698872. Google Scholar
    • Hadfield, J. D. [2010] MCMC methods for multi-response generalized linear mixed models: The MCMCglmm R package. Journal of Statistical Software, 33, 1–22. http://dx.doi.org/10.18637/jss.v033.i02 Crossref, Google Scholar
    • Hammarström, H., Forkel, R., & Haspelmath, M. (2018). Glottolog 4.3. Max Planck Institute for the Science of Human History, Jena. Available at http://glottolog.org. Accessed on January 9, 2020. Google Scholar
    • Healy, P. M., & Wahlen, J. M. [1999] A review of the earnings management literature and its implications for standard setting. Accounting Horizons, 13, 365–383. Crossref, Google Scholar
    • Hofstede, G. (2001). Culture’s Consequences: Comparing Values, Behaviors, Institutions, and Organizations across Nations. SAGE Publications. Google Scholar
    • Honkola, T., Vesakoski, O., Korhonen, K., Lehtinen, J., Syrjänen, K., & Wahlberg, N. [2013] Cultural and climatic changes shape the evolutionary history of the Uralic languages. Journal of Evolutionary Biology, 26, 1244–1253. Crossref, Google Scholar
    • Hooghiemstra, R., Hermes, N., Oxelheim, L., & Randøy, T. [2019] Strangers on the board: The impact of board internationalization on earnings management of Nordic firms. International Business Review, 28, 119–134. Crossref, Google Scholar
    • Hua, X., Greenhill, S., Cardillo, M., Schneemann, H., & Bromham, L. [2018] The ecological drivers of variation in global language diversity. BioRxiv. Available at https://doi.org/10.1101/426502 Google Scholar
    • Hübner, M., & Vannoorenberghe, G. [2015] Patience and long-run growth. Economics Letters, 137, 163–167. Crossref, Google Scholar
    • Hughes, A., Trudgill, P., & Watt, D. [2013] English Accents and Dialects: An Introduction to Social and Regional Varieties of English in the British Isles. Routledge. Crossref, Google Scholar
    • Jaeger, G. [2018] Global-scale phylogenetic linguistic inference from lexical resources. Scientific Data, 5, 180–189. Google Scholar
    • Jakiela, P., & Ozier, O. (2018). Gendered language. Policy Research Working Paper 8464, World Bank Group. Google Scholar
    • Kim, J., Kim, Y., & Zhou, J. [2017] Languages and earnings management. Journal of Accounting and Economics, 63, 288–306. Crossref, Google Scholar
    • Kitchen, A., Ehret, C., Assefa, S., & Mulligan, C. J. [2009] Bayesian phylogenetic analysis of Semitic languages identifies an Early Bronze Age origin of Semitic in the Near East. Proceedings of the Royal Society B: Biological Sciences, 276, 2703–2710. Crossref, Google Scholar
    • Kolipakam, V., Jordan, F. M., Dunn, M., Greenhill, S. J., Bouckaert, R., Gray, R. D., & Verkerk, A. [2018] A Bayesian phylogenetic study of the Dravidian language family. Royal Society Open Science, 5, 171504. Crossref, Google Scholar
    • Kothari, S., Leone, A., & Wasley, C. [2005] Performance matched discretionary accrual measures. Journal of Accounting and Economics, 39, 163–197. Crossref, Google Scholar
    • Lai, V. T., & Boroditsky, L. [2013] The immediate and chronic influence of spatio-temporal metaphors on the mental representations of time in English, Mandarin, and Mandarin-English speakers. Frontiers in Psychology, 4, 142. Google Scholar
    • Lee, S., & Hasegawa, T. [2011] Bayesian phylogenetic analysis supports an agricultural origin of Japonic languages. Proceedings of the Royal Society B: Biological Sciences, 278, 3662–3669. Crossref, Google Scholar
    • Liang, H., Marquis, C., Renneboog, L., & Li Sun, S. (2014). Future-time framing: The effect of language on corporate future orientation. ECGI Finance Working Paper No. 412/2014. Google Scholar
    • Majid, A., Bowerman, M., Kita, S., Haun, D. B. M., & Levinson, S. C. [2004] Can language restructure cognition? The case for space. Trends in Cognitive Sciences, 8, 108–114. Crossref, Google Scholar
    • Majid, A., & Burenhult, N. [2014] Odors are expressible in language, as long as you speak the right language. Cognition, 130, 266–270. https://doi.org/10.1016/j.cognition.2013.11.004 Crossref, Google Scholar
    • Majid, A., Roberts, S. G., & Cilissen, R. [2018] The differential coding of perception in the world’s languages. Proceedings of the National Academy of Sciences of the United States of America, 115, 11369–11376. Crossref, Google Scholar
    • Michael, L., Chousou-Polydouri, N., Bartolomei, K., Donnelly, E., Wauters, V., Meira, S., & O’Hagan, Z. [2015] A Bayesian phylogenetic classification of Tupi-Guarani. LIAMES, 15, 1–36. Google Scholar
    • Naroll, R. [1965] Galton’s problem: The logic of cross-cultural analysis. Social Research, 428–451. Google Scholar
    • Pagel, M. [1997] Inferring evolutionary processes from phylogenies. Zoologica Scripta, 26, 331–348. Crossref, Google Scholar
    • Pereltsvaig, A., & Lewis, M. W. [2015] The Indo-European Controversy. Cambridge University Press. Crossref, Google Scholar
    • R Core Team (2013). R: A language and environment for statistical computing. R Foundation for Statistical Computing, Vienna, Austria. Available at http://www.R-project.org/. Google Scholar
    • Roberson, D., Pak, H., & Hanley, J. R. [2008] Categorical perception of colour in the left and right visual field is verbally mediated: Evidence from Korean. Cognition, 107, 752–762. Crossref, Google Scholar
    • Robertson, C., & Roberts, S. G. (2020). Not when but if: Modality and future time reference in English, Dutch and German. PsyArXiv. Available at https://doi.org/10.31234/osf.io/gdr8e. Google Scholar
    • Roberts, S. G., Torreira, F., & Levinson, S. C. [2015] The effects of processing and sequence organization on the timing of turn taking: A corpus study. Frontiers in Psychology, 6, 509. Crossref, Google Scholar
    • Roberts, S., & Winters, J. [2013] Linguistic diversity and traffic accidents: Lessons from statistical studies of cultural traits. PLOS ONE, 8, e70902. Crossref, Google Scholar
    • Roberts, S. G., Winters, J., & Chen, K. [2015] Future tense and economic decisions: Controlling for cultural evolution. PLOS ONE, 10, e0132145. https://doi.org/10.1371/journal.pone.0132145 Crossref, Google Scholar
    • Sela, R. J., & Simonoff, J. S. (2011). REEMtree: Regression trees with random effects. R package version 0.90.3. Available at https://cran.r-project.org/web/packages/REEMtree. Google Scholar
    • Shoham, A., & Lee, S. M. [2018] The causal impact of grammatical gender marking on gender wage inequality and country income inequality. Business & Society, 57, 1216–1251. Crossref, Google Scholar
    • Sicoli, M. A., & Holton, G. [2014] Linguistic phylogenies support back-migration from Beringia to Asia. PLOS ONE, 9, e91722. Crossref, Google Scholar
    • Spolaore, E., & Wacziarg, R. [2013] How deep are the roots of economic development? Journal of Economic Literature, 51, 325–69. Crossref, Google Scholar
    • Spolaore, E., & Wacziarg, R. [2014] Long-term barriers to economic development. In Handbook of economic growth, P. AghionS. Durlauf (Eds.), Vol. 2, pp. 121–176. Elsevier. Google Scholar
    • Strobl, C., Malley, J., & Tutz, G. [2009] An introduction to recursive partitioning: Rationale, application, and characteristics of classification and regression trees, bagging, and random forests. Psychological Methods, 14, 323. https://doi.org/10.1037/a0016973 Crossref, Google Scholar
    • Tagliamonte, S. A., & Baayen, R. H. [2012] Models, forests, and trees of York English: Was/were variation as a case study for statistical practice. Language Variation and Change, 24, 135–178. Crossref, Google Scholar
    • Verkerk, A. [2013] Scramble, scurry and dash: The correlation between motion event encoding and manner verb lexicon size in Indo-European. Language Dynamics and Change, 3, 169–217. Crossref, Google Scholar
    • Whorf, B. L., Carroll, J. B., & Chase, S. [1956] Language, Thought and Reality: Selected Writings of Benjamin Lee Whorf. MIT Press. Google Scholar