Firm Clustering Based on Financial Statements

22nd Workshop on Information Technology and Information Systems (WITS'12), December 15-16, 2012, Orlando, Florida.

6 Pages Posted: 3 Sep 2013

See all articles by Dazhi Chong

Dazhi Chong

Old Dominion University

Hongwei (Harry) Zhu

University of Massachusetts Lowell

Date Written: October 29, 2012

Abstract

The classification and clustering of firms can help investors, consumers, and stakeholders to collect information, analyze behavior and predict potential market opportunities. Most existing approaches only pay attention to the operation processes and outputs of firms. In this paper, we introduce a firm clustering method that uses XBRL based financial information. With the adoption of XBRL, financial data has become increasingly available to allow for the application of a wide range of clustering methods. In this research, we construct the network of firms using the shared data elements in firms’ financial statements. By implementing a spectral clustering method and applying it to the network, we identify clusters and characteristics of firms in the same cluster but classified as different industries according popular classification methods.

Keywords: XBRL, Spectral clustering, Financial Statement, NAICS

Suggested Citation

Chong, Dazhi and Zhu, Hongwei, Firm Clustering Based on Financial Statements (October 29, 2012). 22nd Workshop on Information Technology and Information Systems (WITS'12), December 15-16, 2012, Orlando, Florida., Available at SSRN: https://ssrn.com/abstract=2319313

Dazhi Chong

Old Dominion University ( email )

Norfolk, VA 23529-0222
United States

Hongwei Zhu (Contact Author)

University of Massachusetts Lowell ( email )

One University Avenue
Lowell, MA 01854
United States

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