Dissecting Corporate Culture Using Generative AI – Insights from Analyst Reports

This paper represents one of the first efforts to delve into the role of corporate culture in shareholder value creation from sell-side equity analysts' vantage point. Applying generative AI (ChatGPT) to 2.4 million analyst reports over the period 20002020, we explore the antecedents and consequences of corporate culture. Specifically, we employ a causal relation extraction approach that automatically finds triples in the form of (culture, relationship, cause or consequence) from analyst reports. The aggregation of these triples constitutes a knowledge graph that represents culture as a node within an interconnected network of firm characteristics, corporate events, and business outcomes. The graph shows that business strategy, management team, and mergers and acquisitions are major drivers of cultural changes, and market share and growth, profitability, and innovation are direct outcomes of firms with a strong culture. Guided by these extracted causal relations, we empirically evaluate a number of new causes and consequences of culture and find supporting evidence. Moreover, we show that positive or future-oriented discussions of culture in analyst reports are positively and significantly associated with analysts' stock recommendations and target prices. We conclude that analyst reports offer insights into the mechanisms through which culture affects business outcomes and that analysts' research on culture contributes to the observed culture-firm value link.