The Different Networks of Firms Implied by the News

42 Pages Posted: 18 Sep 2024 Last revised: 16 Oct 2024

See all articles by Victor Hilt

Victor Hilt

Santa Clara University - Santa Clara University - Leavey School of Business, Students

Gustavo Schwenkler

Santa Clara University - Department of Finance

Date Written: August 31, 2024

Abstract

The interconnectedness of firms through various networks, such as production, credit, and competition, plays a critical role in determining firm-level and aggregate outcomes. However, data on these connections are often limited. This paper introduces a novel artificial intelligence methodology that extracts explicit firm relationship networks from financial news articles, providing comprehensive and interpretable data across multiple dimensions. Applying this methodology to New York Times articles since 1981, we generate extensive networks that predict key macroeconomic indicators. Our publicly accessible dataset offers valuable insights for future research on firm networks and aggregate fluctuations.

Keywords: firm networks, predictability, aggregate fluctuations, natural language processing, large language models. JEL codes: C45, risk management

JEL Classification: D20, E32, C80, G12, G32

Suggested Citation

Hilt, Victor and Schwenkler, Gustavo, The Different Networks of Firms Implied by the News (August 31, 2024). Available at SSRN: https://ssrn.com/abstract=4946066 or http://dx.doi.org/10.2139/ssrn.4946066

Victor Hilt

Santa Clara University - Santa Clara University - Leavey School of Business, Students ( email )

Gustavo Schwenkler (Contact Author)

Santa Clara University - Department of Finance ( email )

Santa Clara, CA 95053
United States

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