Renáta Myšková

Forecasting corporate financial performance using sentiment in annual reports for stakeholders’ decision-making

AbstractThis paper is aimed at examining the role of annual reports’ sentiment in forecasting financial performance. The sentiment (tone, opinion) is assessed using several categorization schemes in order to explore various aspects of language used in the annual reports of U.S. companies. Further, we employ machine learning methods and neural networks to predict financial performance expressed in terms of the Z-score bankruptcy model. Eleven categories of sentiment (ranging from negative and positive to active and common) are used as the inputs of the prediction models. Support vector machines provide the highest forecasting accuracy. This evidence suggests that there exist non-linear relationships between the sentiment and financial performance. The results indicate that the sentiment information is an important forecasting determinant of financial performance and, thus, can be used to support decision-making process of corporate stakeholders.

Predicting Financial Distress of Banks Using Random Subspace Ensembles of Support Vector Machines

Models for financial distress predictions of banks are increasingly important tools used as early warning signals for the whole banking systems. In this study, a model based on random subspace method is proposed to predict investment/non-investment rating grades of U.S. banks. We show that support vector machines can be effectively used as base learners in the meta-learning model. We argue that both financial and non-financial (sentiment) information are important categories of determinants in financial distress prediction. We show that this is true for both banks and other companies.

Costs Efficiency Evaluation using Life Cycle Costing as Strategic Method

Abstract Costs optimization is further developed not only by the pure economic theory but more with practical management. In the context of the economic crisis 2008 and the previous crises we do observe the pressure on the sophisticated cost optimization. Into the important strategic costs tools belong Activity Based Costing, Target Costing, Life Cycle Costing. We use these methods for optimal costs management, observation, and the costs minimization. In the article we applied the concept of Life Cycle Costing (LCC). This is an application of Life Cycle Hypothesis into the practical costs management. We present comprehensive information about the LCC method. In the other words, to provide and present the alternative approach how to achieve long term minimum value of total costs from strategic point of view.

Comprehensive assessment of firm financial performance using financial ratios and linguistic analysis of annual reports

Indicators of financial performance, especially financial ratio analysis, have become important financial decision-support information used by firm management and other stakeholders to assess financial stability and growth potential. However, additional information may be hidden in management communication. The article deals with the analysis of the annual reports of U.S. firms from both points of view, a financial one based on a set of financial ratios, and a linguistic one based on the analysis of other information presented by firms in their annual reports. Spearman correlation coefficient is used to compare the values of financial and linguistic indicators. For the purpose of the comprehensive assessment, novel word lists are proposed, specifically designed for each category of financial analysis. The aim is to assess the information ability of annual reports and whether successful firms present their results precisely or not. The results show that the proposed topic dictionaries can be beneficial, especially for the assessment of cash flow and leverage ratios.

Novel Multi-word Lists for Investors' Decision Making

The language of firm-related documents is recognized as being an important indicator of transparent firm culture and management access to stakeholders. This study aims to analyze annual reports of selected U.S. firms during 2008-2010 from the investors perspective. We examine whether investment indicators correspond to the tone sentiment of management comments in annual reports. To overcome the limitations of domain-specific single-word dictionaries, we develop positive and negative multi-word dictionaries. We present the results separately for two sectors, manufacturing and services. We show that the multi-word dictionaries correlate better with the indicators of investment activity, in particular with those related to long-term investment.

Risks Associated with the Human Resources Management in Transport Companies

Transport sector occupies a crucial position in the competitiveness growth of the Czech Republic in comparison with other EU states. The interconnectedness of markets and the ability to successfully fill new markets are associated with the quality of human resources in the sector. Their lack causes serious problems in selected transport areas and in the long run, it leads to a reduction or loss of country competitiveness. An overall increase in transport sector efficiency can be achieved, among other things, by creating quality human resources, thus increasing the knowledge capital of the society. In the Czech Republic Government top strategic document - The Transport Policy of the Czech Republic for 2014–2020 with the Prospect of 2050, this issue is dealt with in the priority Social Issues, Employment, Education and Qualification. Transport policy and the related national level strategic and legislative documents set the targets and measures to achieve these targets, which imply risks and responsibilities for transport companies. The article presents a methodical advancement which enables to find risk factors to transport companies in the HR field, determines their significance and impact on the economic results of the company. Timely detection risk ability, importance assignment of individual risk factors and the subsequent division into risk groups will allow then to determine the appropriate measures that will help reduce the risk to a predetermined level or eliminate risk causes, and thus overall to reduce the enterprise risk, to enable flexible response to changing market conditions and to increase company competitiveness.

Approach to Risk Management Decision-Making in the Small Business

Abstract The defining of long-term oriented goals and methods of achieving them is always associated with uncertainty, because we cannot assume that we know all the circumstances, either positive or negative, which might occur in the future. The management of a small business has to make decisions under uncertainty and insecurity, and has to take into account the risks that are associated with the business. The aim of this paper is to identify risks that could significantly affect the performance of the small enterprise and to define and analyse the risk in a particular company, including methods that should be used for risk assessment.