Financial Statement Analysis with Large Language Models

Understand

We investigate whether large language models (LLMs) can successfully perform financial statement analysis in a way similar to a professional human analyst.

• We provide standardized and anonymous financial statements to GPT4 and instruct the model to analyze them to determine the direction of firms' future earnings.
• Even without narrative or industry-specific information, the LLM outperforms financial analysts in its ability to predict earnings changes directionally.
• The LLM exhibits a relative advantage over human analysts in situations when the analysts tend to struggle.