Abstract
The determination of the firm life cycle has been carried out in relation to the establishment of corporate strategy in the field of accounting or management. The life cycle prediction based on financial information is long because it is determined based on the financial performance of the entity over a year. This study sought to lay the foundation for overcoming this by using news articles to predict the life cycle of a company. In the process of quantifying news article data and predicting the firm life cycle, the method of selecting keywords that can represent the firm life cycle is presented, and the life cycle prediction model is verified with four machine learning techniques using selected candidate keywords. In this study, all four machine learning techniques showed a predicted static classification rate of nearly 60%, demonstrating the availability of news articles, which are unstructured text data, in predicting the corporate life cycle.
Highlights
The term corporate life cycle is a concept that extends the theory on the life cycle of a product to the level of a company
We demonstrate how to select candidates for keywords that can represent a company’s life cycle and how to use selected candidate keywords to implement a machine learning model that uses the corporate life cycle phase defined by financial information as a target variable
The keywords detected to represent the firm life cycle will be applied to the model implemented at the previous process in contrast to the results of the 2018 financial information-based firm life cycle forecast, thereby validating the validity of the experiment and demonstrating the significance of the firm life cycle prediction through the news article that is intended to be argued in this paper
Summary
The term corporate life cycle (or firm life cycle) is a concept that extends the theory on the life cycle of a product to the level of a company. The life cycle of an enterprise is sometimes defined by internal factors, financial factors and markets, and external circumstances as five phases of establishment, growth, maturity, decline, dissolution, or three phases that excludes establishment and decline. It is important because it can be used as an indicator to determine the strategic direction, market response, investment, and direction depending on the phase of the entity’s life cycle. Financial information means information produced with annual, quarterly, or semi-annual cycles. In this study, based on the financial and market value information of the enterprise obtained from prior research, the company’s life cycle is predicted. We demonstrate how to select candidates for keywords that can represent a company’s life cycle and how to use selected candidate keywords to implement a machine learning model that uses the corporate life cycle phase defined by financial information as a target variable
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