IDEAS home Printed from https://ideas.repec.org/a/eee/pacfin/v84y2024ics0927538x24000581.html
   My bibliography  Save this article

Applied AI for finance and accounting: Alternative data and opportunities

Author

Listed:
  • Cao, Sean Shun
  • Jiang, Wei
  • Lei, Lijun (Gillian)
  • Zhou, Qing (Clara)

Abstract

Big data and artificial intelligence (AI) have transformed the finance industry by altering the way data and information are generated, processed, and incorporated into decision-making processes. Data and information have emerged as a new class of assets, facilitating efficient contracting and risk-sharing among corporate stakeholders. Researchers have also increasingly embraced machine learning and AI analytics tools, which enable them to exploit empirical evidence to an extent that far surpasses traditional methodologies. In this review article, prepared for a special issue on Artificial Intelligence (AI) and Finance in the Pacific-Basin Finance Journal, we aim to provide a summary of the evolving landscape of AI applications in finance and accounting research and project future avenues of exploration. Given the burgeoning mass of literature in this field, it would be unproductive to attempt an exhaustive catalogue of these studies. Instead, our goal is to offer a structured framework for categorizing current research and guiding future studies. We stress the importance of blending financial domain expertise with state-of-the-art data analytics skills. This fusion is essential for researchers and professionals to harness the opportunities offered by data and analytical tools to better comprehend and influence our financial system.

Suggested Citation

  • Cao, Sean Shun & Jiang, Wei & Lei, Lijun (Gillian) & Zhou, Qing (Clara), 2024. "Applied AI for finance and accounting: Alternative data and opportunities," Pacific-Basin Finance Journal, Elsevier, vol. 84(C).
    • Handle: RePEc:eee:pacfin:v:84:y:2024:i:c:s0927538x24000581
    DOI: 10.1016/j.pacfin.2024.102307
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0927538X24000581
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.pacfin.2024.102307?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Sean Shun Cao, 2016. "Reexamining Growth Effects: Are All Types of Asset Growth the Same?," Contemporary Accounting Research, John Wiley & Sons, vol. 33(4), pages 1518-1548, December.
    2. John (X.) Jiang & Isabel Y. Wang & K. Philip Wang, 2018. "Revolving Rating Analysts and Ratings of Mortgage-Backed and Asset-Backed Securities: Evidence from LinkedIn," Management Science, INFORMS, vol. 64(12), pages 5832-5854, December.
    3. Sean Cao & Wei Jiang & Junbo L. Wang & Baozhong Yang, 2021. "From Man vs. Machine to Man + Machine: The Art and AI of Stock Analyses," NBER Working Papers 28800, National Bureau of Economic Research, Inc.
    4. Kathleen Weiss Hanley & Gerard Hoberg, 2019. "Dynamic Interpretation of Emerging Risks in the Financial Sector," The Review of Financial Studies, Society for Financial Studies, vol. 32(12), pages 4543-4603.
    5. Daniel Bradley & Sinan Gokkaya & Xi Liu, 2020. "Ties That Bind: The Value of Professional Connections to Sell-Side Analysts," Management Science, INFORMS, vol. 66(9), pages 4118-4151, September.
    6. Lin William Cong & Zhiguo He, 2019. "Blockchain Disruption and Smart Contracts," The Review of Financial Studies, Society for Financial Studies, vol. 32(5), pages 1754-1797.
    7. Ball, R & Brown, P, 1968. "Empirical Evaluation Of Accounting Income Numbers," Journal of Accounting Research, Wiley Blackwell, vol. 6(2), pages 159-178.
    8. David Yermack, 2017. "Corporate Governance and Blockchains," Review of Finance, European Finance Association, vol. 21(1), pages 7-31.
    9. Hales, Jeffrey & Moon, James R. & Swenson, Laura A., 2018. "A new era of voluntary disclosure? Empirical evidence on how employee postings on social media relate to future corporate disclosures," Accounting, Organizations and Society, Elsevier, vol. 68, pages 88-108.
    10. Green, T. Clifton & Huang, Ruoyan & Wen, Quan & Zhou, Dexin, 2019. "Crowdsourced employer reviews and stock returns," Journal of Financial Economics, Elsevier, vol. 134(1), pages 236-251.
    11. Xi Chen & Yang Ha (Tony) Cho & Yiwei Dou & Baruch Lev, 2022. "Predicting Future Earnings Changes Using Machine Learning and Detailed Financial Data," Journal of Accounting Research, Wiley Blackwell, vol. 60(2), pages 467-515, May.
    12. Christina Zhu, 2019. "Big Data as a Governance Mechanism," The Review of Financial Studies, Society for Financial Studies, vol. 32(5), pages 2021-2061.
    13. John L. Campbell & Matthew D. DeAngelis & James R. Moon, 2019. "Skin in the game: personal stock holdings and investors’ response to stock analysis on social media," Review of Accounting Studies, Springer, vol. 24(3), pages 731-779, September.
    14. Cao, Sean Shun & Fang, Vivian W. & (Gillian) Lei, Lijun, 2021. "Negative peer disclosure," Journal of Financial Economics, Elsevier, vol. 140(3), pages 815-837.
    15. Lian Fen Lee & Amy P. Hutton & Susan Shu, 2015. "The Role of Social Media in the Capital Market: Evidence from Consumer Product Recalls," Journal of Accounting Research, Wiley Blackwell, vol. 53(2), pages 367-404, May.
    16. Tim Loughran & Bill Mcdonald, 2011. "When Is a Liability Not a Liability? Textual Analysis, Dictionaries, and 10‐Ks," Journal of Finance, American Finance Association, vol. 66(1), pages 35-65, February.
    17. Congcong Li & An-Ping Lin & Hai Lu & Kevin Veenstra, 2020. "Gender and beauty in the financial analyst profession: evidence from the United States and China," Review of Accounting Studies, Springer, vol. 25(4), pages 1230-1262, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jian Guo & Heung-Yeung Shum, 2024. "Large Investment Model," Papers 2408.10255, arXiv.org, revised Aug 2024.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Blankespoor, Elizabeth & deHaan, Ed & Marinovic, Iván, 2020. "Disclosure processing costs, investors’ information choice, and equity market outcomes: A review," Journal of Accounting and Economics, Elsevier, vol. 70(2).
    2. Aysan, Ahmet Faruk & Caporin, Massimiliano & Cepni, Oguzhan, 2024. "Not all words are equal: Sentiment and jumps in the cryptocurrency market," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 91(C).
    3. Svenja Dube & Chenqi Zhu, 2021. "The Disciplinary Effect of Social Media: Evidence from Firms' Responses to Glassdoor Reviews," Journal of Accounting Research, Wiley Blackwell, vol. 59(5), pages 1783-1825, December.
    4. Ilya Ivaninskiy & Irina Ivashkovskaya & Joseph A. McCahery, 2023. "Does digitalization mitigate or intensify the principal-agent conflict in a firm?," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 27(3), pages 695-725, September.
    5. Ilya Ivaninskiy & Irina Ivashkovskaya, 2022. "Are blockchain-based digital transformation and ecosystem-based business models mutually reinforcing? The principal-agent conflict perspective," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(4), pages 643-670, December.
    6. Walker, Clive B., 2024. "Going mainstream: Cryptocurrency narratives in newspapers," International Review of Financial Analysis, Elsevier, vol. 94(C).
    7. ED deHAAN & NAN LI & FRANK S. ZHOU, 2023. "Financial Reporting and Employee Job Search," Journal of Accounting Research, Wiley Blackwell, vol. 61(2), pages 571-617, May.
    8. Nerantzidis, Michail & Tampakoudis, Ioannis & She, Chaoyuan, 2024. "Social media in accounting research: A review and future research agenda," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 54(C).
    9. Dennis W. Campbell & Ruidi Shang, 2022. "Tone at the Bottom: Measuring Corporate Misconduct Risk from the Text of Employee Reviews," Management Science, INFORMS, vol. 68(9), pages 7034-7053, September.
    10. Yao Ge & Zheng Qiao & Zhe Shen & Zhiyu Zhang, 2023. "Production similarity and the cross‐section of stock returns: A machine learning approach," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(5), pages 4849-4882, December.
    11. Chau, Michael & Lin, Chih-Yung & Lin, Tse-Chun, 2020. "Wisdom of crowds before the 2007–2009 global financial crisis," Journal of Financial Stability, Elsevier, vol. 48(C).
    12. Lin William Cong & Zhiguo He & Jiasun Li & Wei Jiang, 2021. "Decentralized Mining in Centralized Pools [Concentrating on the fall of the labor share]," The Review of Financial Studies, Society for Financial Studies, vol. 34(3), pages 1191-1235.
    13. Kim, Jongkyum & Lim, Jee-Hae & Yoon, Kyunghee, 2022. "How do the content, format, and tone of Twitter-based corporate disclosure vary depending on earnings performance?," International Journal of Accounting Information Systems, Elsevier, vol. 47(C).
    14. Yang, Xiaoping & Cao, Dongmei & Andrikopoulos, Panagiotis & Yang, Zonghan & Bass, Tina, 2020. "Online social networks, media supervision and investment efficiency: An empirical examination of Chinese listed firms," Technological Forecasting and Social Change, Elsevier, vol. 154(C).
    15. Olivier Meier & Aurélie Sannajust, 0. "The smart contract revolution: a solution for the holdup problem?," Small Business Economics, Springer, vol. 0, pages 1-16.
    16. Laurens Swinkels, 2023. "Empirical evidence on the ownership and liquidity of real estate tokens," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-29, December.
    17. Kim, Jonghwan (Simon) & Ra, Kyeongheum, 2022. "Employee satisfaction and asymmetric cost behavior: Evidence from Glassdoor," Economics Letters, Elsevier, vol. 219(C).
    18. Pablo Pastory y Camarasa & Martien Lamers, 2023. "Do Actions Follow Words? How bank sentiment predicts credit growth," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 23/1073, Ghent University, Faculty of Economics and Business Administration.
    19. Rui Wang & Zhangxi Lin & Hang Luo, 2019. "Blockchain, bank credit and SME financing," Quality & Quantity: International Journal of Methodology, Springer, vol. 53(3), pages 1127-1140, May.
    20. Martin Cimiterra & Jackie Krafft & Lionel Nesta, 2021. "Blockchain as Schumpeter Mark 1 or Mark 2? An empirical analysis of blockchain job offers in France and Germany [Innovation: mapping the winds of creative destruction]," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 30(6), pages 1388-1402.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:pacfin:v:84:y:2024:i:c:s0927538x24000581. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/pacfin .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.