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Study of Entrepreneurial Spirit Leading to Better Stock Return and Financial Performance

We track and measure the entrepreneurial spirits reflected in the annual reports of listed firms in the United States and examine whether the terms that reflect entrepreneurialism can predict firms’ success in the short (one year), medium (3-5 years) and long run (10 years). Firm performance (stock return, sales, and profit growth) and the terms used by successful firms (e.g. Amazon, Google (Alphabet), Priceline, Facebook, NVidia and 3M) will be compared to those which are considered as less successful. Candidates for the focused terms may include “research”, “teamwork”, “entrepreneurial”, “creativity”, “innovation”, “drive”, “brand”, “technology”, “intellectual”, “growth”, “patents’, “trademarks”.  However, up to now, all academic articles are geared towards identifying how the tone of disclosure (whether optimistic or pessimistic, or whether the disclosure reflects greater uncertainty) affects stock return. We do not find any work attempting to locate whether a firm is entrepreneurial.

Expected deliverable:
We hope the deep learning methodology will provide improvements over the existing methods. A practical end product will be an interesting investment strategy based on identifying the entrepreneurial spirit of the firm.

Project leader:
Dr. Chi Wai LING
Tel: 39635532

Team members:
Prof. Lam Chee Keung and his colleagues, Prof. Chin and his colleagues