Lost in Translation? Analysts' Forecasts of Cross-Listed Firms

The level of difficulty for U.S. analysts in the native language of a cross-listed firm increases their forecast errors. The association is decreased by analyst experience and analyst fluency in the language of the crosslisted firms. The association is also decreased for countries using IFRS and those with higher financial reporting quality. Investors react more strongly to forecasts for firms that present greater language difficulty to analysts. Overall, our findings suggest that the language difficulty of cross-listed firms is associated with a poor information environment and capital-market-related costs.