Recent Research into CEO Compensation

On Wednesday 18th January, the CFA Society United Kingdom (CFA UK) hosted a breakfast meeting at Innholders’ Court (London, EC4R 2RH) to discuss findings of a recently completed CFA UK-funded research project examining CEO compensation across the FTSE-350 from 2003 to 2015. CFA UK represents the interests of around 12,000 investment professionals in the UK and the report received widespread press coverage over the Christmas period including coverage from the BBC, The Times, The Guardian, and Financial Times.

The report (co-authored with Dr Weijia Li, Lancaster University Management School and available to download at: https://www.cfauk.org/media-centre/cfa-uk-executive-remuneration-report-2016) contributes to the executive remuneration debate by providing independent statistical evidence highlighting a limited association between economic value creation and executive pay.

Among other findings, the research suggests that despite relentless pressure from regulators and governance reformers over the last two decades to ensure closer alignment between executive pay and performance, the association between CEO pay and fundamental value creation in the UK remains weak at best.

At the heart of the problem is the disconnect between the performance measures that are widely employed in executive remuneration contracts such as earnings per share (EPS) growth and total shareholder return (TSR), and the extent to which these metrics provide reliable information on periodic value creation. Economic theory clearly demonstrates that EPS growth and TSR provide poor proxies for value creation; and this insight is confirmed in the data, with correlations below 30% documented for these measures and more sophisticated value-based performance metrics such as residual income and economic profit that include an explicit charge for invested capital.

The work also reveals that mandatory pay-related annual report disclosures designed to enhance the transparency of executive remuneration arrangements have become increasingly complicated and hard to read (measured by the Fog index), to the extent that even relatively sophisticated consumers of firms’ published reports struggle to identify basic information such as total compensation paid to the CEO during the reporting period.

Attendees at the event comprised representatives from a range of City institutions including CFA UK, The Investment Association, SVM Asset Management, RPMI Railpen, Schroders, PIRC, Aberdeen Asset Management, JP Morgan Asset Management, Kepler Cheuvreux, Legal & General Investment Management, Fidelity International, Willis Towers Watson, Pensions and Lifetime Savings Association.

Will Goodhart (Chief Executive, CFA UK) welcomed attendees and Natalie Winterfrost (Aberdeen Asset Management) provided context for the research. After a brief summary of the research purpose, methodology and main findings, plus follow-up comments from steering committee members Prof Brian Main (Edinburgh University), James Cooke (SVM Asset Management), and Alasdair Wood (Willis Towers Watson), attendees engaged in a lively discussion concerning the report’s conclusions and their implications for executive compensation policy in the UK. The discussions will help CFA UK to formulate its engagement strategy with companies and institutional investors to improve the degree of alignment between pay and value generation.

Introducing the CASS Guided Reading Project (Part 2)

In the first blog entry, we noted that there is a substantial variability in our understanding of how guided reading is thought to foster specific literacy skills. Further, we explained how our use of corpus methods will enable us to identify a wide range of teacher strategies used in guided reading. That is a crucial first step in providing a more refined understanding of the range of teacher strategies that are used. A natural ‘next step’ is to determine which strategies are most effective: that is, which strategies result in positive outcomes. Again, corpus search tools provide an efficient and accurate method for achieving this.

Which language and literacy skills are targeted by guided reading?

Guided reading has the potential to develop a range of essential reading skills. These skills are numerous, so teachers may choose to target different skills according to the group’s reading ability. For example, 4-year-olds are only just beginning to develop their ability to read words on a page, so teachers are more likely to focus on ways of improving their accurate translation of print into word meanings (i.e., decoding skills and vocabulary). Conversely, older children are able to read words relatively well, so teachers are more likely to target improving an understanding of the language that has been accessed from the printed word (i.e., reading comprehension skills).

How can we measure potential outcomes from guided reading?

Compared to normal ‘control’ reading sessions, children who undertake a series of guided reading sessions typically display greater improvements in standardised assessments of reading skills (see Burkins & Croft, 2009; Ford, 2015).

However, such longitudinal assessments do not provide a measure of the effect that specific teacher strategies have on the quality of the responses by the child. Some recent studies of shared reading (which apply similar scaffolding strategies to guided reading, but involve the sharing of an enlarged book rather than providing a copy to each child) have attempted to investigate this by parsing through the children’s responses and coding for features of interest. For example, Justice and colleagues (2013) used this method to report that children responded to rich teacher input by providing more multi-clause utterances themselves (e.g., coordinated clauses: He read the book and watched TV; subordinated clauses: He read the book because he enjoys reading). However, as noted in the first blog, this means of coding is arduous and time consuming. Instead, we can use corpus search methods to uncover a wider range of language features more reliably and speedily. That enables us to analyse a larger number of child-teacher interactions and to study these interactions across a range of contexts and in relation to a number of different factors such as (i) age, (ii) reading ability, (iii) socio-economic status, (iv) gender, (v) reading motivation, and (vi) teacher experience. These will be discussed separately in a future blog.

Other research into shared reading has used some simple corpus search methods to measure the quality of response. Those studies measured whether the average length of an utterance is one word or multiword (e.g., Zucker and colleagues, 2010). However, such a measure is limited in richness of information, and only applies to very young children (up to around 5 years of age). Our work at CASS will draw on the work from shared reading and extend that knowledge base by providing more advanced corpus search queries that enable a fine-grained analysis of the quality of children’s responses. For example, we can analyse the quality of responses in terms of grammatical features, vocabulary diversity, and syntactic structure, rather than just on length of utterance.

In an upcoming blog, we will provide a closer insight into the specific corpus search measurements that we are using to identify teacher strategies (as introduced in the first blog), and their effectiveness on the quality of responses by children (as introduced in the current blog).

An update on data collection

The CASS guided reading project aims to create a large corpus made up of a total of 100 guided reading sessions that each last between 15-35 minutes. So far, we have recorded around 80% of our target number of sessions, and the corpus is projected to reach between 400,000 to 500,000 words!

All recordings have been at primary schools in the UK with children aged between 4 and 10 (Y1 to Y6). Recordings are made in a naturalistic manner such that they are non-invasive to the normal proceedings of a lesson. A voice recorder is set up, as well as a video camera so that we can identify individual speakers if the audio is unclear.

A big shout out to all the wonderful schools and teachers who have helped us so far: Ryelands CE, Mereside, Baines Endowed CE, Dolphinholme CE, Ellel St John’s CE, Halton St Wilfrid’s CE, Pilling St John’s CE, and Kirkland and Catterall Saint Helen’s CE. These schools have been so welcoming and their contribution to the research is invaluable! Also, a big thanks to our ‘Queen of transcription’, Ruth Avon, who has worked tirelessly to keep the transcribing of the recordings well on track for a complete analysis in early 2017.

References

Burkins, J. & Croft, M. M. (2010). Preventing misguided reading: new strategies for guided reading teachers. Thousand Oaks CA: Corwin.

Ford, M. P. (2015). Guided Reading: What’s New, and What’s Next? North Mankato, MN: Capstone.

Justice, L. M., McGinty, A.S., Zucker, T., Cabell, S.Q., & Piasta, S.B. (2013). Bi-directional dynamics underlie the complexity of talk in teacher–child play-based conversations in classrooms serving at-risk pupils. Early Childhood Research Quarterly, 28, 496– 508.

Zucker, T.A., Justice, L.M., Piasta, S. B., Kaderavek, J. N. (2010). Preschool teachers’ literal and inferential questions and children’s responses during whole-class shared reading. Early Childhood Research Quarterly, 25, 65–83.

Introducing the CASS Guided Reading Project (Part 1)

In collaboration with the Department of Psychology, CASS is investigating the critical features of guided reading that can benefit the language and literacy skills of typically developing children.

What is guided reading?

Guided reading is a technique used by teachers to support literacy development. The teacher works with a small group of children, typically not more than 6, who are grouped according to ability and who work together on the same text. This ability-grouping enables the teacher to focus on the specific needs of those children, and to provide opportunities for them to develop their understanding of what they read through discussion, as well as their reading fluency. In this project we are investigating the features of effective guided reading, with a particular emphasis on reading comprehension.

Features of guided reading

Teachers aim to bridge the gap between children’s current and potential ability. Research indicates that this is best achieved by using methods that facilitate interaction, rather than by providing explicit instruction alone (e.g., Pianta et al., 2007).

The strategies that teachers can use to support and develop understanding of the text are best described as lying on a continuum, from low challenge strategies – for example, asking children simple yes/no or closed-answer questions – to high challenge strategies, that might require children to explain a character’s motivation and evaluate the text. Low challenge strategies pose more limited constraints on possible answers: they may simply require children to repeat back part of the text or provide a one word response, such as a character’s name. High challenge strategies provide greater opportunity for children to express their own interpretation of the text.

Low challenge questions can be used by the teacher to assess children’s basic level of understanding and are also a good way to encourage children to participate in the session. High challenge questions assess a deeper understanding and more sophisticated comprehension skills. Skilled teachers will adapt questions and their challenge depending on the group and individual children’s level of understanding and responsiveness, with the intent of gradually increasing the responsibility for the children to take turns in leading the discussion. This technique is used to scaffold the discussion.

Our investigation: How is guided reading effective?

Previous studies observing guided reading highlight substantial variability in what teachers do and, therefore, in our understanding of how guided reading can be used to best foster language and literacy skills. A more fine-grained and detailed examination of teacher input and its relation to children’s responses is needed to determine the teacher strategies that are most effective in achieving specific positive outcomes (see Burkins & Croft, 2009; Ford, 2015).

Previous research on this topic has typically taken the form of observational studies, in which researchers have had to laboriously parse and hand-code transcriptions of the teacher-children interactions (a corpus) to identify teacher strategies of interest. Because this is a long and painstaking process, it limits the size of the corpus to one that can be coded within a realistic time window. In this project, we aim to maximise interpretation of these naturalistic classroom interactions using powerful corpus search tools. These enable precise computer-searches for a wide range of language features, and are much faster and more reliable compared to hand-coding. This enables us to create and explore a much larger corpus of guided reading sessions than in previous studies, making a fine-grained analysis possible. For an introduction to corpus search methods, check out this CASS document.

Future blogs will provide more detail about the specific corpus search measurements that CASS are using to identify what makes for effective guided reading. The next (upcoming) blog, however, will explain the motivation for using corpus methods to investigate the effective outcomes of guided reading.

Meet the Author of this blog: Liam Blything

Since July 2016, I have been working as a Senior Research Associate on the CASS guided reading project. My Psychology PhD focused on language acquisition and has been awarded by Lancaster University. It is a great privilege to be working on such an exciting project that answers psychological questions with all these exciting and advanced corpus linguistics methods. I look forward to providing future updates!

 

References

Burkins, J. & Croft, M. M. (2010). Preventing misguided reading: new strategies for guided reading teachers. Thousand Oaks CA: Corwin.

Pianta, R. C., Belsky, J., Houts, R., Morrison, F., & the National Institute of Child Health and Human Development Early Child Care Research Network. (2007). Opportunities to learn in America’s elementary classrooms. Science, 315, 1795–1796.

Ford, M. P. (2015). Guided Reading: What’s New, and What’s Next? North Mankato, MN : Capstone.

 

Controlling the scale and pace of immigration: changes in UK press coverage about migration

The issue of immigration prominently featured in debates leading up to the June 2016 EU Referendum vote. It was argued that too many people were entering the UK, largely from other EU member states. Politicians and media also talked about ‘taking back control’—notably in the contexts of deciding who can enter Britain and enforcing borders. But, as our new Migration Observatory report ‘A Decade of Immigration in the British Press’ reveals through corpus linguistic methods, such language wasn’t necessarily new: in fact, under the coalition government from 2010-2015, the press was increasingly casting migration in terms of its scale or pace. And, the relative importance of ‘limiting’ or ‘controlling’ migration rose over this period, too.

Our report aimed to understand how British press coverage of immigration had changed in the decade leading up to the May 2015 General Election. We built upon previous research done at Lancaster University (headed by CASS Deputy Director Paul Baker) into portrayals of migrant groups. Our corpus of 171,401 items comes from all 19 national UK newspapers (including Sunday versions) that continuously published between January 2006 and May 2015. Using the Sketch Engine, we identified the kinds of modifiers (adjectives) and actions (verbs) associated with the terms ‘immigration’ and ‘migration’.

The modifiers that were most frequently associated with either of these terms included ‘mass’ (making up 15.7% of all modifiers appearing with either word), ‘net’ (15.6%), and ‘illegal’ (11.9%). Closer examination of the top 50 modifiers revealed a group of words related to the scale or pace of migration: in addition to ‘mass’ and ‘net’, these included terms such as ‘uncontrolled’, ‘large-scale’, ‘high’, and ‘unlimited’. Grouping these terms together, and tracking their proportion of all modifiers compared to those related to illegality—which is another prominent way of referring to immigrants—reveals how these terms made up an increasingly larger share of modifiers under both the Labour and coalition governments since 2006. Figure 1 shows how these words made up nearly 40% of all modifiers in 2006, but over 60% in the five months of 2015. Meanwhile, the share of modifiers referring to legal aspects of immigration (‘illegal’, ‘legal’, ‘unlawful’, or ‘irregular’) declined from 22% in 2006 to less than 10% in January-May 2015.

Figure 1.

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Another way of examining this dimension of ‘scale’ or ‘pace’ is to look at the kinds of actions (verbs) done to ‘immigration’ or ‘migration’. For example, in the sentences ‘the government is reducing migration’ and ‘we should encourage more highly-skilled immigration’, the verbs ‘reduce’ and ‘encourage’ signal some kind of action being done to ‘immigration’ and ‘migration’. In a similar way to Figure 1, we looked at the most frequent verbs associated with either term. A category of words expressing efforts to limit or control movement—what we call ‘limit’ verbs in the report—emerged from the top 50 verbs. These included examples such as ‘control’, ‘tackle’, ‘reduce’, and ‘cap’.

Figure 2 shows how the overall frequency of these limit verbs, indicated by the solid line, rose by about five times between 2006 and the high point in 2014—most notably from 2013. But, as a share of all verbs expressing some action towards ‘immigration’ or ‘migration’, this category was consistently making up 30-40% from 2010 onwards. This suggests that, although these kinds of words weren’t that frequent in absolute terms until 2014, the press had already started moving towards using them from 2010.

Figure 2.

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These results show how the kind of language around immigration has changed since 2006. Corpus methods allow us to look at a large amount of text—in this case, over a significant period of time in British politics—in order to put recent rhetoric in its longer context. By doing so, researchers contribute concrete evidence about how the British press has actually talked about migrants and migration. Such evidence opens timely and important debates about the role of the press in public discussion (how does information presented through media impact public opinion?) and the extent to which press outputs should be scrutinised.

About the author: William Allen is a Research Officer with The Migration Observatory and the Centre on Migration, Policy, and Society (COMPAS), both based at the University of Oxford. His research focuses on the ways that media, public opinion, and policymaking on migration interact. He also is interested in the ways that migration statistics and research evidence is used in non-academic settings, especially through data visualisations.

New CASS PhD student!

CASS is delighted to welcome new PhD student Andressa Gomide to the centre, where she will be working on data visualization in corpus linguistics. Continue reading to find out more about Andressa!


I am in the first year of a my PhD in Linguistics, which is focused on data visualizations for corpus tools. Being a research student at CASS, I am looking forward to gaining a better understanding of how different fields of study use corpus tools in their research.

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I’ve been involved with corpus linguistics since 2011, when I started my undergraduate research program on leaner corpora. Since then, I have developed a strong interest in corpus studies, which led me to devote my BA and my MA to this theme. I completed both my BA and my MA at the Universidade Federal de Minas Gerais in Brazil.

Aside from my interest in linguistics, I also enjoy outdoor activities such as cycling and hiking.

CASS goes to the Wellcome Trust!

Earlier this month I represented CASS in a workshop, hosted by the Wellcome Trust, which was designed to explore the language surrounding patient data. The remit of this workshop was to report back to the Trust on what might be the best ways to communicate to patients about their data, their rights respecting their data, and issues surrounding privacy and anonymity. The workshop comprised nine participants who all communicated with the public as part of their jobs, including journalists, bloggers, a speech writer, a poet, and a linguist (no prizes for guessing who the latter was…). On a personal note, I had prepared for this event from the perspective of a researcher of health communication. However, the backgrounds of the other participants meant that I realised very quickly that my role in this event would not be so specific, so niche, but was instead much broader, as “the linguist” or even “the academic”.

Our remit was to come up with a vocabulary for communication about patient data that would be easier for patients to understand. As it turned out, this wasn’t too difficult, since most of the language surrounding patient data is waffly at its best, and overly-technical and incomprehensible at its worst. One of the most notable recommendations we made concerned the phrase ‘patient data’ itself, which we thought might carry connotations of science and research, and perhaps disengage the public, and so recommended that the phrase ‘patient health information’ might sound less technical and more 14876085_10154608287875070_1645281813_otransparent. We undertook a series of tasks which ranged from sticking post-it notes on whiteboards and windows, to role play exercises and editing official documents and newspaper articles. What struck me, and what the diversity of these tasks demonstrated particularly well, was how the suitability of our suggested terms could only really be assessed once we took the words off the post-it notes and inserted them into real-life communicative situations, such as medical consultations, patient information leaflets, newspaper articles, and even talk shows.

The most powerful message I took away from the workshop was that close consideration of linguistic choices in the rhetoric surrounding health is vital for health care providers to improve the ways that they communicate with the public. To this end, as a collection of methods that facilitate the analysis of large amounts of authentic language data in and across a variety of texts and contexts, corpus linguistics has an important role to play in providing such knowledge in the future. Corpus linguistic studies of health-related communication are currently small in number, but continue to grow apace. Although the health-related research that is being undertaken within CASS, such as Beyond the Checkbox and Metaphor in End of Life Care, go some way to showcasing the rich fruits that corpus-based studies of health communication can bear, there is still a long way to go. In particular, future projects in this area should strive to engage consumers of health research not only in terms of our findings, but also the (corpus) methods that we have used to get there.

Corpus Linguistics, and why you might want to use it, despite what (you think) you know about it

As part of the Spatial Humanities project at Lancaster University, and in collaboration with the Centre for Corpus Approaches to Social Sciences, the central aim of my PhD research project is to investigate the potential of corpus linguistics to allow for the exploration of spatial patterns in large amounts of digitised historical texts. Since I come from a Sociology/Linguistics background, my personal aim since the start of my PhD journey has been to try and understand what historical scholarship practices look like, what kinds of questions historians are interested in (whether they are presently being asked or not), how historians may benefit from using corpus linguistics, and also what challenges historians might encounter when trying to take advantage of corpus linguistics’ affordances. I don’t think I can over-stress how helpful coming to the RSVP conferences has been in this respect, and how grateful I am to the welcoming and helpful community of scholars I have encountered there.

I have chosen to write this post as an introduction to corpus linguistics for several reasons. First, on many counts RSVP members have asked me to explain to them what corpus linguistics consists of; I hope this post begins to answer that question. Second, I have sometimes encountered a reluctance to consider computerised text analysis methods. This reluctance is understandable and should be taken seriously. There are indeed very real challenges to working with computers in the Humanities and it is worth considering them. Ultimately, I hope to help bring corpus linguistics to the attention of those scholars who may find it useful.

The Humanities unavoidably involve messy data and the messy, fluid, categories which we try to apply to them. Computers on the other hand are all about known quantities and a lack of ambiguity. So why use computers in the Humanities? Computers are bad at what humans are good at: understanding. But they are also good at what humans are bad at: performing large and accurate calculations at remarkable speed. Generating historical insight cannot be done at the press of a button, but computers can assist us in manipulating the large amounts of data which are relevant to the questions we care about.

The most fundamental tool in corpus linguistics – the area of linguistics devoted to developing tools and methods to facilitate the quantitative and qualitative analysis of large amounts of text – is the concordance: a method which has been in use for centuries. A concordance is simply a list of occurrences of a word (or expression) of interest, accompanied by some limited context (see figure 1). Drawing up such a concordance manually is a very lengthy process, which can occupy years of an individual’s life. In contrast, once the data has been prepared in certain ways, specialised computer-based corpus linguistic tools can draw up such a concordance within a few seconds, even for tens of thousands of lines of text drawn from a database containing millions of words. For just this simple feat, computers are invaluable for the historian. But why use corpus linguistics tools? After all, all historical digital collections come with interfaces which offer searchability through queries of some sort.

Figure 1: Search results for ‘police’ presented as a concordancefigure1-png

Read the rest from the RSVP website.

Further Trinity Lancaster Corpus research: Examiner strategies

This month saw a further development in the corpus analyses: the examiners. Let me introduce myself, my name is Cathy Taylor and I’m responsible for examiner training at Trinity and was very pleased to be asked to do some corpus research into the strategies the examiners use when communicating with the test takers.

In the GESE exams the examiner and candidate co-construct the interaction throughout the exam. The examiner doesn’t work from a rigid interlocutor framework provided by Trinity but instead has a flexible test plan which allows them to choose from a variety of questioning and elicitation strategies. They can then respond more meaningfully to the candidate and cover the language requirements and communication skills appropriate for the level. The rationale behind this approach is to reflect as closely as possible what happens in conversations in real life. Another benefit of the flexible framework is that the examiner can use a variety of techniques to probe the extent of the candidate’s competence in English and allow them to demonstrate what they can do with the language. If you’re interested more information can be found in Trinity’s speaking and listening tests: Theoretical background and research.

After some deliberation and very useful tips from the corpus transcriber, Ruth Avon, I decided to concentrate my research on the opening gambit for the conversation task at Grade 6, B1 CEFR. There is a standard rubric the examiner says to introduce the subject area ‘Now we’re going to talk about something different, let’s talk about…learning a foreign language.’  Following this, the examiner uses their test plan to select the most appropriate opening strategy for each candidate. There’s a choice of six subject areas for the conversation task listed for each grade in the Exam information booklet.

Before beginning the conversation examiners have strategies to check that the candidate has understood and to give them thinking time. The approaches below are typical.

  1. E: ‘Let’s talk about learning a foreign language…’
    C: ‘yes’
    E:Do you think English is an easy language?’ 
  1. E: ‘Let ‘s talk about learning a foreign language’
    C: ‘It’s an interesting topic’
    E: ‘Yes uhu do you need a teacher?
  1. It’s very common for the examiner to use pausing strategies which gives thinking time:
    E: ‘Let ‘s talk about learning a foreign language erm why are you learning English?’
    C: ‘Er I ‘m learning English for work erm I ‘m a statistician.’

There are a range of opening strategies for the conversation task:

  • Personal questions: ‘Why are you learning English?’ ‘Why is English important to you?’
  • More general question: ‘How important is it to learn a foreign language these days?’
  • The examiner gives a personal statement to frame the question: ‘I want to learn Chinese (to a Chinese candidate)…what do I have to do to learn Chinese?’
  • The examiner may choose a more discursive statement to start the conversation: ‘Some people say that English is not going to be important in the future and we should learn Chinese (to a Chinese candidate).’
  • The candidate sometimes takes the lead:
  • Examiner: ‘Let’s talk about learning a foreign language’
  • Candidate: ‘Okay, okay I really want to learn a lo = er learn a lot of = foreign languages’

A salient feature of all the interactions is the amount of back channelling the examiners do e.g. ‘erm, mm’  etc. This indicates that the examiner is actively listening to the candidate and encouraging them to continue. For example:

E: ‘Let’s talk about learning a foreign language, if you want to improve your English what is the best way?
C: ‘Well I think that when you see programmes in English’
E: ‘mm
C: ‘without the subtitles’
E: ‘mm’
C: ‘it’s a good way or listening to music in other language
E: ‘mm
C: ‘it’s a good way and and this way I have learned too much

When the corpus was initially discussed it was clear that one of the aims should be to use the findings for our examiner professional development programme.  Using this very small dataset we can develop worksheets which prompt examiners to reflect on their exam techniques using real examples of examiner and candidate interaction.

My research is in its initial stages and the next step is to analyse different strategies and how these validate the exam construct. I’m also interested in examiner strategies at the same transition point at the higher levels, i.e. grade 7 and above, B2, C1 and C2 CEFR. Do the strategies change and if so, how?

It’s been fascinating working with the corpus data and I look forward to doing more in the future.

Continue reading

Textual analysis training for European doctoral researchers in accounting

Professor Steve Young (Lancaster University Management School and PI of the CASS ESRC funded project Understanding Corporate Communications) was recently invited to the 6th Doctoral Summer Program in Accounting Research (SPAR) to deliver sessions specializing in textual analysis of financial reporting. The invitation reflects the increasing interest in narrative reporting among accounting researchers.

The summer program was held at WHU – Otto Beisheim School of Management (Vallendar, Germany) 11-14 July, 2016.

Professor Young was joined by Professors Mary Bath (Stanford University) and Wayne Landsman (University of North Carolina, Chapel Hill), whose sessions covered a range of current issues in empirical financial reporting research including disclosure and the cost of capital, fair value accounting, and comparative international financial reporting. Students also benefitted from presentations by Prof. Dr. Andreas Barckow (President, Accounting Standards Committee of Germany) and Prof. Dr. Sven Hayn (Partner, EY Germany).

The annual SPAR training event was organised jointly by the Ludwig Maximilian University of Munich School of Management and the WHU – Otto Beisheim School of Management. The programme attracts the top PhD students in accounting from across Europe with the aim of introducing them to cutting-edge theoretical, methodological, and practical issues involved in conducting high-quality financial accounting research. This year’s cohort comprised 31 carefully selected students from Europe’s leading business schools.

Professor Young delivered four sessions on textual analysis. Sessions 1 & 2 focused on the methods currently applied in accounting research and the opportunities associated with applying more advanced approaches from computational linguistics and natural language processing. The majority of extant work in mainstream accounting research relies on bag-of-words methods (e.g., dictionaries, readability, and basic machine learning applications) to study the properties and usefulness of narrative aspects of financial communications; significant opportunities exist for accounting researchers applying more mainstream textual analysis methods including part of speech tagging, semantic analysis, topic models, summarization, text mining, and corpus methods.

Sessions 3 & 4 reviewed the extant literature on automated textual analysis in accounting and financial communication. Session 3 concentrated on earnings announcements and annual reports. Research reveals that narrative disclosures are incrementally informative beyond quantitative data for stock market investors, particularly in circumstances where traditional accounting data provide an incomplete picture of firm performance and value. Nevertheless, evidence also suggests that management use narrative commentaries opportunistically when the incentives to do so are high.  Session 4 reviewed research on other aspects of financial communication including regulatory information [e.g., surrounding mergers and acquisitions (M&A) and initial public offerings (IPOs)], conference calls, analysts’ reports, financial media, and social media. Evidence consistently indicates that financial narratives contain information that is not captured by quantitative results.

Slides for all four sessions are available here.

The event was a great success. Students engaged actively in all sessions (including presentations and discussions of published research using textual analysis methods). New research opportunities were explored involving the analysis of new financial reporting corpora and the application of more advanced computational linguistics methods. Students also received detailed feedback from faculty on their research projects, a significant number of which involved application of textual analysis methods. Special thanks go to Professor Martin Glaum and his team at WHU for organizing and running the summer program.

Dealing with Optical Character Recognition errors in Victorian newspapers

CASS PhD student, Amelia Joulain-Jay, has been researching to what extent OCR errors are a problem when researching historical texts, and whether these errors can be corrected. Amelia’s work has recently been featured in a very interesting blog post on the British Library’s website – you can read the full post here.