Foreign-language effect and professionals’ judgments on fair value measurement: Evidence from Germany and the United Kingdom

International Financial Reporting Standards (IFRS) have been developed in an attempt to minimize the differences in accounting practices across countries. These standards are developed in English and translated into other local languages. However, if professionals attach different meanings in interpreting key accounting concepts based on the language used, then comparability and consistency of their judgments will be compromised. We contribute to the behavioral finance literature by examining whether experienced professionals attach consistent or different connotative meanings to one of the key IFRS concepts, namely, ‘fair value’. Our findings show a consistent pattern of differences in professionals’ judgments on ‘fair values’ in English and its German translation. Awareness of a foreign-language effect will help professionals, firms, and standard setters to develop communication and language strategies and policies.