Improving the prediction of firm performance using nonfinancial disclosures: a machine learning approach
Usman Sufi,
Arshad Hasan,
Khaled Hussainey
Abstract:PurposeThe purpose of this study is to test whether the prediction of firm performance can be enhanced by incorporating nonfinancial disclosures, such as narrative disclosure tone and corporate governance indicators, into financial predictive models.Design/methodology/approachThree predictive models are developed, each with a different set of predictors. This study utilises two machine learning techniques, random forest and stochastic gradient boosting, for prediction via the three models. The data are collect… Show more
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