Cao, Rui, Gene Moo Lee, Hasan Cavusoglu (2020) “Corporate Social Network Analysis: A Deep Learning Approach,” Working Paper.
- Presented at UBC (2020), WITS (2020).
- Based on Rui Cao’s Master’s Thesis
- Research assistants: Anthony Chiodo, Daniel Lin, Miliban Keyim, and Sara Watts.
- Corporate Social Network Visualization: https://misr.sauder.ubc.ca/corporate_network/index_full.html
Identifying inter-firm relationships is critical in understanding the industry landscape. However, due to the dynamic nature of such relationships, it is challenging to capture corporate social networks in a scalable and timely manner. To address this issue, this research develops a framework to build corporate social network representations by applying natural language processing (NLP) techniques on a corpus of 10-K filings, describing the reporting firms’ perceived relationships with other firms. Our framework uses named-entity recognition (NER) to locate the corporate names in the text, topic modeling to identify types of relationships included, and BERT to predict the type of relationship described in each sentence. To show the value of the network measures created by the proposed framework, we conduct two empirical analyses to see their impacts on firm performance. The first study shows that competition relationship and in-degree measurements on all relationship types have prediction power in estimating future earnings. The second study focuses on the difference between individual perspectives in an inter-firm social network. Such a difference is measured by the direction of mentions and is an indicator of a firm’s success in network governance. Receiving more mentions from other firms is a positive signal to network governance and it shows a significant positive correlation with firm performance next year.