Measuring Corporate Culture Using Machine Learning

• 成果类型: Article
• 署名作者: Li, Kai; Mai, Feng; Shen, Rui; Yan, Xinyan
• 署名单位: University of British Columbia; Stevens Institute of Technology; The Chinese University of Hong Kong, Shenzhen; University System of Ohio; University of Dayton
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhaa079
• 发表日期: 2021
• 页码: 3265
• 关键词: CONFERENCE CALLS; Textual analysis; SOCIAL-CONTROL; INFORMATION; mergers; performance; management; executives

摘要

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.