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In search of meaning: Lessons, resources and next steps for computational analysis of financial discourse

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  • Mahmoud El‐Haj
  • Paul Rayson
  • Martin Walker
  • Steven Young
  • Vasiliki Simaki

Abstract

We critically assess mainstream accounting and finance research applying methods from computational linguistics (CL) to study financial discourse. We also review common themes and innovations in the literature and assess the incremental contributions of studies applying CL methods over manual content analysis. Key conclusions emerging from our analysis are: (a) accounting and finance research is behind the curve in terms of CL methods generally and word sense disambiguation in particular; (b) implementation issues mean the proposed benefits of CL are often less pronounced than proponents suggest; (c) structural issues limit practical relevance; and (d) CL methods and high quality manual analysis represent complementary approaches to analyzing financial discourse. We describe four CL tools that have yet to gain traction in mainstream AF research but which we believe offer promising ways to enhance the study of meaning in financial discourse. The four tools are named entity recognition (NER), summarization, semantics and corpus linguistics.

Suggested Citation

  • Mahmoud El‐Haj & Paul Rayson & Martin Walker & Steven Young & Vasiliki Simaki, 2019. "In search of meaning: Lessons, resources and next steps for computational analysis of financial discourse," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 46(3-4), pages 265-306, March.
    • Handle: RePEc:bla:jbfnac:v:46:y:2019:i:3-4:p:265-306
    DOI: 10.1111/jbfa.12378
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    1. Ho-Tan-Phat Phan & Francesco De Luca & Lea Iaia, 2020. "The “Walk” towards the UN Sustainable Development Goals: Does Mandated “Talk” through NonFinancial Disclosure Affect Companies’ Financial Performance?," Sustainability, MDPI, vol. 12(6), pages 1-20, March.
    2. Katarzyna Anna Bilicka & Elisa Casi & Carol Seregni & Barbara Stage, 2021. "Tax Strategy Disclosure: A Greenwashing Mandate?," CESifo Working Paper Series 9030, CESifo.
    3. Huimin (Amy) Chen & Bill B. Francis & Tahseen Hasan & Qiang Wu, 2022. "Does corporate culture impact audit pricing? Evidence from textual analysis," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 49(5-6), pages 778-806, May.
    4. Eduardo Schiehll & Sam Kolahgar, 2021. "Financial materiality in the informativeness of sustainability reporting," Business Strategy and the Environment, Wiley Blackwell, vol. 30(2), pages 840-855, February.
    5. Khaldoon Albitar & Tony Abdoush & Khaled Hussainey, 2023. "Do corporate governance mechanisms and ESG disclosure drive CSR narrative tones?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(4), pages 3876-3890, October.
    6. Ankit Jain & Hariom Manchiraju & Shyam V. Sunder, 2023. "Institutional ownership and the informativeness of disclosure tone," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 50(1-2), pages 61-90, January.
    7. Pastwa, Anna M. & Shrestha, Prabal & Thewissen, James & Torsin, Wouter, 2021. "Unpacking the black box of ICO white papers: a topic modeling approach," LIDAM Discussion Papers LFIN 2021018, Université catholique de Louvain, Louvain Finance (LFIN).
    8. Danial Hemmings & Lynn Hodgkinson & Gwion Williams, 2020. "It's OK to pay well, if you write well: The effects of remuneration disclosure readability," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 47(5-6), pages 547-586, May.
    9. Steven F. Cahan & Seokjoo Chang & Wei Z. Siqueira & Kinsun Tam, 2022. "The roles of XBRL and processed XBRL in 10‐K readability," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 49(1-2), pages 33-68, January.
    10. Tarek Abdelfattah & Mohamed Elmahgoub & Ahmed A. Elamer, 2021. "Female Audit Partners and Extended Audit Reporting: UK Evidence," Journal of Business Ethics, Springer, vol. 174(1), pages 177-197, November.
    11. Doron Reichmann & Rouven Möller & Tobias Hertel, 2022. "Nothing but good intentions: the search for equity and stock price crash risk," Journal of Business Economics, Springer, vol. 92(9), pages 1455-1489, November.
    12. Berkin, Anil & Aerts, Walter & Van Caneghem, Tom, 2023. "Feasibility analysis of machine learning for performance-related attributional statements," International Journal of Accounting Information Systems, Elsevier, vol. 48(C).
    13. Thewissen, James & Shrestha, Prabal & Torsin, Wouter & Pastwa, Anna M., 2022. "Unpacking the black box of ICO white papers: A topic modeling approach," Journal of Corporate Finance, Elsevier, vol. 75(C).
    14. Buckmann, Marcus & Haldane, Andy & Hüser, Anne-Caroline, 2021. "Comparing minds and machines: implications for financial stability," Bank of England working papers 937, Bank of England.
    15. Murat Aydogdu & Hakan Saraoglu & David Louton, 2019. "Using long short‐term memory neural networks to analyze SEC 13D filings: A recipe for human and machine interaction," Intelligent Systems in Accounting, Finance and Management, John Wiley & Sons, Ltd., vol. 26(4), pages 153-163, October.
    16. Arslan-Ayaydin, Özgür & Bishara, Norman & Thewissen, James & Torsin, Wouter, 2020. "Managerial career concerns and the content of corporate disclosures: An analysis of the tone of earnings press releases," International Review of Financial Analysis, Elsevier, vol. 72(C).
    17. Mehmet Yildiz & Nicola Pless & Semih Ceyhan & Rob Hallak, 2023. "Responsible Leadership and Innovation during COVID-19: Evidence from the Australian Tourism and Hospitality Sector," Sustainability, MDPI, vol. 15(6), pages 1-21, March.
    18. Stefania Veltri & Francesco De Luca & Ho‐Tan‐Phat Phan, 2020. "Do investors value companies' mandatory nonfinancial risk disclosure? An empirical analysis of the Italian context after the EU Directive," Business Strategy and the Environment, Wiley Blackwell, vol. 29(6), pages 2226-2237, September.
    19. Söhnke M. Bartram & Harald Lohre & Peter F. Pope & Ananthalakshmi Ranganathan, 2021. "Navigating the factor zoo around the world: an institutional investor perspective," Journal of Business Economics, Springer, vol. 91(5), pages 655-703, July.
    20. Moreno, Angel-Ivan & Caminero, Teresa, 2022. "Application of text mining to the analysis of climate-related disclosures," International Review of Financial Analysis, Elsevier, vol. 83(C).
    21. Bassyouny, Hesham & Abdelfattah, Tarek & Tao, Lei, 2022. "Narrative disclosure tone: A review and areas for future research," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 49(C).

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