Textual Analysis in Accounting and Finance: A Survey

Loughran, Tim; McDonald, Bill

doi:10.2139/ssrn.2504147

Textual Analysis in Accounting and Finance: A Survey

56 Pages Posted: 3 Oct 2014 Last revised: 21 May 2016

See all articles by Tim Loughran

Bill McDonald

University of Notre Dame - Mendoza College of Business - Department of Finance

There are 2 versions of this paper

Date Written: May 20, 2016

Abstract

Relative to quantitative methods traditionally used in accounting and finance, textual analysis is substantially less precise. Thus, understanding the art is of equal importance to understanding the science. In this survey we describe the nuances of the method and, as users of textual analysis, some of the tripwires in implementation. We also review the contemporary textual analysis literature and highlight areas of future research.

Keywords: Textual analysis; sentiment analysis; bag-of-words; readability; word lists; Zipf’s law; cosine similarity; Naïve Bayes

JEL Classification: D82; D83; G14; G18; G30; M40; M41

Suggested Citation: Suggested Citation

Loughran, Tim and McDonald, Bill, Textual Analysis in Accounting and Finance: A Survey (May 20, 2016). Available at SSRN: https://ssrn.com/abstract=2504147 or http://dx.doi.org/10.2139/ssrn.2504147