As some investors utilize artificial intelligence to study and analyze CEOs’ and other managers’ language patterns and tone, bringing up a new frontier of potential to make mistakes, CEOs and other managers are increasingly under the microscope.
According to Evan Schnidman, a language pattern software specialist, some IT executives were downplaying the potential of semiconductor chip shortages while discussing supply-chain disruptions in late 2020.
They assured me that everything was alright.
Despite this, a computer study aimed to identify hidden cues in – ideally spontaneous – spoken words found high levels of uncertainty in their tone of voice.
“We discovered that the positive textual mood of IT sector CEOs’ responses were discordant with their tone,” said Schnidman, who advises two fintech companies included in the study.
Within months after the comments, corporations such as Volkswagen and Ford were predicting a major shortage of semiconductors that would disrupt production. The value of car and industrial companies’ stock has dropped. There is currently a supply shortage, according to IT executives.
Computer-driven quant funds that used scores assigned to the tone of the managers’ comments rather than scores assigned to the written words, according to Schnidman, would have been better positioned prior to the industry turbulence.
We don’t know if the executives were being overly optimistic at the outset or really changed their opinions as circumstances changed, thus one example can’t attest to the veracity of the speech analysis.
interviews with 11 fund managers who are employing or testing such systems, some investors consider the technology – known as natural language processing (NLP) – as one new weapon to gain an edge over competitors.
Traditional financial data and business statements, they claim, are now so widely mined that they are of little value.
