Textual Analysis in Finance

37 Pages Posted: 24 Oct 2019

See all articles by Tim Loughran

Tim Loughran

University of Notre Dame

Bill McDonald

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

Date Written: October 15, 2019

Abstract

We begin this paper by updating recent reviews of textual analysis in finance while focusing on a few broad topics — social media and detecting fraud — and then discuss a central methodological issue of how lexicons should be constructed. We next center the discussion on readability as an attribute frequently incorporated in contemporaneous research, arguing that its usage begs the question of what we are measuring. Finally, we discuss how the literature might build on the intent of readability to measure something more appropriate and more broadly relevant — complexity.

Keywords: textual analysis, complexity, readability, Fog Index, social media, lexicons

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

Suggested Citation

Loughran, Tim and McDonald, Bill, Textual Analysis in Finance (October 15, 2019). Available at SSRN: https://ssrn.com/abstract=3470272 or http://dx.doi.org/10.2139/ssrn.3470272

Tim Loughran (Contact Author)

University of Notre Dame ( email )

Department of Finance
245 Mendoza College of Business
Notre Dame, IN 46556-5646
United States
574-631-8432 (Phone)
574-631-5255 (Fax)

Bill McDonald

University of Notre Dame - Mendoza College of Business - Department of Finance ( email )

P.O. Box 399
Notre Dame, IN 46556-0399
United States

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