An empirical investigation to IT corporation using collocational networks method

Abstract

PurposeTo study how the collocational networks method could be used to analyze textual contents in listed companies' annual reports written in Chinese, in an attempt to identify hidden facts that are not released in a listed company's financial statements.Design/methodology/approachThis research extended the collocation network analysis method from English textual contents to Chinese textual contents. The extended collocation network method was used to analyze an Information Technology company, Clever, listed in Shanghai stock exchange of China.FindingsUsing the extended collocational networks method, some hidden facts about a Chinese listed company's financial status could be identified, which were not reported in company's officially released financial statements.Practical implicationsThe extended collocation network method may supplement the commonly practiced fundamental financial analysis method in helping investors have a better understanding about the financial soundness of listed companies. This is especially important to investors in stock markets of some developing countries, including China. In addition, this method may help regulators of stock market, especially in developing countries, to identify possible loopholes of existing financial regulations as well as some inappropriate practices of some listed companies in disclosing misleading or incorrect financial data in their financial statements.Originality/valueThe first study using the collocational networks method to analyze annual reports of Chinese corporations listed in Shanghai stock exchange, a newly established stock market.