From Man vs. Machine to Man + Machine: The Art and AI of Stock Analyses

Date
2021
Authors
Wang, Junbo
Cao, Sean
Yang, Baozhong
Jiang, Wei
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
An AI analyst we build to digest corporate financial information, qualitative disclosure, and macroeconomic indicators is able to beat the majority of human analysts in stock price forecasts and generate excess returns compared to following human analysts. In the contest of “man vs machine,” the relative advantage of the AI Analyst is stronger when the firm is complex, and when information is high-dimensional, transparent and voluminous. Human analysts remain competitive when critical information requires institutional knowledge (such as the nature of intangible assets). The edge of the AI over human analysts declines over time when analysts gain access to alternative data and to in-house AI resources. Combining AI’s computational power and the human art of understanding soft information produces the highest potential in generating accurate forecasts. Our paper portraits a future of “machine plus human” (instead of human displacement) in high-skill professions.
Description
Keywords
Artificial Intelligence, Machine Learning, FinTech, Stock Analyst, Alternative Data, Disruptive Innovation
Citation
Rights
Access Rights
Email libraryada-l@lists.hawaii.edu if you need this content in ADA-compliant format.