“No Comment”: Language Barriers and the IASB’s Comment Letter Process

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2022
Authors
Flores, Eduardo
Monsen, Brian
Shafron, Emily
Yust, Christopher
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The International Accounting Standards Board (IASB) asserts that global stakeholder participation in the standard-setting process is critical for developing and maintaining high-quality accounting standards. However, the myriad languages used by countries that use International Financial Reporting Standards (IFRS) create impediments to this participation. We are the first to systematically examine the effect of language barriers on formal participation in the standard-setting process. We find that the IASB is less likely to receive comment letters from stakeholders in countries with languages exhibiting higher linguistic distance from English. We also find that linguistic distance impairs comment letter readability, likely decreasing their impact in the redeliberation process. Finally, we find that linguistically distant comment letters are less likely to be quoted in IASB staff-prepared comment letter summaries. Collectively, our results show that language barriers appear to impede the IASB’s efforts to equitably obtain valuable feedback, which undermines the standard-setting process.
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IFRS, language barriers, standard setter, lobbying, diversity
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