Journal article
Measuring Corporate Culture Using Machine Learning
The Review of financial studies, Vol.34(7), pp.3265-3315
07/01/2021
DOI: 10.1093/rfs/hhaa079
Abstract
We create a culture dictionary using one of the latest machine learning techniques-the word embedding model-and 209,480 earnings call transcripts. We score the five corporate cultural values of innovation, integrity, quality, respect, and teamwork for 62,664 firm-year observations over the period 2001-2018. We show that an innovative culture is broader than the usual measures of corporate innovation - R&D expenses and the number of patents. Moreover, we show that corporate culture correlates with business outcomes, including operational efficiency, risk-taking, earnings management, executive compensation design, firm value, and deal making, and that the culture-performance link is more pronounced in bad times. Finally, we present suggestive evidence that corporate culture is shaped by major corporate events, such as mergers and acquisitions.
Details
- Title: Subtitle
- Measuring Corporate Culture Using Machine Learning
- Creators
- Kai Li - University of British ColumbiaFeng Mai - Stevens Institute of TechnologyRui Shen - Chinese University of Hong Kong, ShenzhenXinyan Yan - University of Dayton
- Resource Type
- Journal article
- Publication Details
- The Review of financial studies, Vol.34(7), pp.3265-3315
- Publisher
- Oxford Univ Press
- DOI
- 10.1093/rfs/hhaa079
- ISSN
- 0893-9454
- eISSN
- 1465-7368
- Number of pages
- 51
- Grant note
- 435-2018-0037 / Social Sciences and Humanities Research Council of Canada; Social Sciences and Humanities Research Council of Canada (SSHRC) OSU Risk Institute RG92/14 / Singapore Ministry of Education Academic Research Fund Tier 1; Ministry of Education, Singapore
- Language
- English
- Date published
- 07/01/2021
- Academic Unit
- Business Analytics
- Record Identifier
- 9984701833502771
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