Tag Archives: firm-level

Development of Topic Trend Analysis Model for Industrial Intelligence using Public Data (J. Technology Innovation 2018)

Park, S., Lee, G. M., Kim, Y.-E., Seo, J. (2018). Development of Topic Trend Analysis Model for Industrial Intelligence using Public Data (in Korean), Journal of Technology Innovation, 26(4), 199-232.

  • Funded by the Korea Institute of Science and Technology Information (KISTI)
  • Demo website: https://misr.sauder.ubc.ca/edgar_dashboard/
  • Presented at UKC (2017), KISTI (2017), WITS (2017), Rutgers Business School (2018)

There are increasing needs for understanding and fathoming of the business management environment through big data analysis at the industrial and corporative level. The research using the company disclosure information, which is comprehensively covering the business performance and the future plan of the company, is getting attention. However, there is limited research on developing applicable analytical models leveraging such corporate disclosure data due to its unstructured nature. This study proposes a text-mining-based analytical model for industrial and firm-level analyses using publicly available company disclosure data. Specifically, we apply LDA topic model and word2vec word embedding model on the U.S. SEC data from the publicly listed firms and analyze the trends of business topics at the industrial and corporate levels.

Using LDA topic modeling based on SEC EDGAR 10-K document, whole industrial management topics are figured out. For comparison of different pattern of industries’ topic trend, software and hardware industries are compared in recent 20 years. Also, the changes in management subject at the firm level are observed with a comparison of two companies in the software industry. The changes in topic trends provide a lens for identifying decreasing and growing management subjects at industrial and firm-level. Mapping companies and products(or services) based on dimension reduction after using word2vec word embedding model and principal component analysis of 10-K document at the firm level in the software industry, companies and products(services) that have similar management subjects are identified and also their changes in decades.

For suggesting a methodology to develop an analytical model based on public management data at the industrial and corporate level, there may be contributions in terms of making the ground of practical methodology to identifying changes of management subjects. However, there are required further researches to provide a microscopic analytical model with regard to the relation of technology management strategy between management performance in case of related to the various pattern of management topics as of frequent changes of management subject or their momentum. Also, more studies are needed for developing competitive context analysis model with product(service)-portfolios between firms.

Developing Cyber Risk Assessment Framework for Cyber Insurance: A Big Data Approach (KIRI Research Report 2018)

Lee, G. M. (2018). Developing Cyber Risk Assessment Framework for Cyber Insurance: A Big Data Approach (in Korean). KIRI Research Report 2018-15.

As our society is heavily dependent on information and communication technology, the associated risk has also significantly increased. Cyber insurance has been emerged as a possible means to better manage such cyber risk. However, the cyber insurance market is still in a premature stage due to the lack of data sharing and standards on cyber risk and cyber insurance. To address this issue, this research proposes a data-driven framework to assess cyber risk using externally observable cyber attack data sources such as outbound spam and phishing websites. We show that the feasibility of such an approach by building cyber risk assessment reports for Korean organizations. Then, by conducting a large-scale randomized field experiment, we measure the causal effect of cyber risk disclosure on organizational security levels. Finally, we develop machine-learning models to predict data breach incidents, as a case of cyber incidents, using the developed cyber risk assessment data. We believe that the proposed data-driven methods can be a stepping-stone to enable information transparency in the cyber insurance market.

Predicting Litigation Risk via Machine Learning

Lee, Gene Moo*, James Naughton*, Xin Zheng*, Dexin Zhou* (2020) “Predicting Litigation Risk via Machine Learning,” Working Paper. [SSRN] (* equal contribution)

This study examines whether and how machine learning techniques can improve the prediction of litigation risk relative to the traditional logistic regression model. Existing litigation literature has no consensus on a predictive model. Additionally, the evaluation of litigation model performance is ad hoc. We use five popular machine learning techniques to predict litigation risk and benchmark their performance against the logistic regression model in Kim and Skinner (2012). Our results show that machine learning techniques can significantly improve the predictability of litigation risk. We identify two best-performing methods (random forest and convolutional neural networks) and rank the importance of predictors. Additionally, we show that models using economically-motivated ratio variables perform better than models using raw variables. Overall, our results suggest that the joint consideration of economically-meaningful predictors and machine learning techniques maximize the improvement of predictive litigation models.

Does Deceptive Marketing Pay? The Evolution of Consumer Sentiment Surrounding a Pseudo-Product-Harm Crisis (J. Business Ethics 2019)

Song, Reo, Ho Kim, Gene Moo Lee, and Sungha Jang (2019) Does Deceptive Marketing Pay? The Evolution of Consumer Sentiment Surrounding a Pseudo-Product-Harm Crisis. Journal of Business Ethics, 158(3), pp. 743-761.

The slandering of a firm’s products by competing firms poses significant threats to the victim firm, with the resulting damage often being as harmful as that from product-harm crises. In contrast to a true product-harm crisis, however, this disparagement is based on a false claim or fake news; thus, we call it a pseudo-product-harm crisis. Using a pseudo-product-harm crisis event that involved two competing firms, this research examines how consumer sentiments about the two firms evolved in response to the crisis. Our analyses show that while both firms suffered, the damage to the offending firm (which spread fake news to cause the crisis) was more detrimental, in terms of advertising effectiveness and negative news publicity, than that to the victim firm (which suffered from the false claim). Our study indicates that, even apart from ethical concerns, the false claim about the victim firm was not an effective business strategy to increase the offending firm’s performance.

How would information disclosure influence organizations’ outbound spam volume? Evidence from a field experiment (J. Cybersecurity 2016)

He, Shu*, Gene Moo Lee*, Sukjin Han, Andrew B. Whinston (2016) How Would Information Disclosure Influence Organizations’ Outbound Spam Volume? Evidence from a Field Experiment. Journal of Cybersecurity 2(1), pp. 99-118. (* equal contribution)

Cyber-insecurity is a serious threat in the digital world. In the present paper, we argue that a suboptimal cybersecurity environment is partly due to organizations’ underinvestment on security and a lack of suitable policies. The motivation for this paper stems from a related policy question: how to design policies for governments and other organizations that can ensure a sufficient level of cybersecurity. We address the question by exploring a policy devised to alleviate information asymmetry and to achieve transparency in cybersecurity information sharing practice. We propose a cybersecurity evaluation agency along with regulations on information disclosure. To empirically evaluate the effectiveness of such an institution, we conduct a large-scale randomized field experiment on 7919 US organizations. Specifically, we generate organizations’ security reports based on their outbound spam relative to the industry peers, then share the reports with the subjects in either private or public ways. Using models for heterogeneous treatment effects and machine learning techniques, we find evidence from this experiment that the security information sharing combined with publicity treatment has significant effects on spam reduction for original large spammers. Moreover, significant peer effects are observed among industry peers after the experiment.

Toward a Better Measure of Business Proximity: Topic Modeling for Industry Intelligence (MISQ 2016)

Shi, Zhan, Gene Moo Lee, Andrew B. Whinston (2016) Toward a Better Measure of Business Proximity: Topic Modeling for Industry Intelligence. MIS Quarterly 40(4), pp. 1035-1056.

In this article, we propose a new data-analytic approach to measure firms’ dyadic business proximity. Specifically, our method analyzes the unstructured texts that describe firms’ businesses using the statistical learning technique of topic modeling, and constructs a novel business proximity measure based on the output. When compared with existent methods, our approach is scalable for large datasets and provides finer granularity on quantifying firms’ positions in the spaces of product, market, and technology. We then validate our business proximity measure in the context of industry intelligence and show the measure’s effectiveness in an empirical application of analyzing mergers and acquisitions in the U.S. high technology industry. Based on the research, we also build a cloud-based information system to facilitate competitive intelligence on the high technology industry.

Towards a Better Measure of Business Proximity: Topic Modeling for Analyzing M&As (EC 2014)

Shi, Z., Lee, G. M., Whinston, A. B. (2014). Towards a Better Measure of Business Proximity: Topic Modeling for Analyzing M&As, Proceedings of ACM Conference on Economics and Computation (EC 2014), Palo Alto, California

In this article, we propose a new data-analytic approach to measure firms’ dyadic business proximity. Specifically, our method analyzes the unstructured texts that describe firms’ businesses using the statistical learning technique of topic modeling, and constructs a novel business proximity measure based on the output. When compared with existent methods, our approach is scalable for large datasets and provides finer granularity on quantifying firms’ positions in the spaces of product, market, and technology. We then validate our business proximity measure in the context of industry intelligence and show the measure’s effectiveness in an empirical application of analyzing mergers and acquisitions in the U.S. high technology industry. Based on the research, we also build a cloud-based information system to facilitate competitive intelligence on the high technology industry.