Lundquist College of Business Associate Professor of Accounting Kyle Peterson is not a numbers guy.

“I tend to do a lot of my research actually on text,” explained Peterson. “I find information that can be useful to investors in the words of the companies themselves.”

For a current project, Peterson is examining the way firms talk about competition in a paper titled “Information Content of Forward-looking Competition Disclosure”. He uses the example of a 10-K, or annual financial report issued by a company, to explain.

“A lot of people may have the preconceived notion that companies spend a lot of the 10-K talking about boilerplate risks, or legalese from the company’s lawyers that is not really that informative,” he said. “One of those topics is competition. This project looks at how companies discuss competition in their 10-Ks and what information that contains.”

Those statements are typically quite predictive.

“The paper looks at whether it matters if they talk about that competition in the future tense or in the present tense: ‘We think competition will be strong in the future’ or ‘we have a lot of competition right now,’” Peterson said.

“It actually turns out if a firm is talking about competition in the future tense, then it is more serious. They are more likely to be taking steps to address competition. It tends to have a larger negative effect on their returns in the future. But if they are talking about it in the present tense, it’s seems like competition is not as potent or strong.”

Peterson is also studying machine learning—or using sophisticated artificial intelligence that not only processes information, but adapts and “learns” from the patterns and connections made.

“There may only be about five pages that are actual financial statements in a 10-K,” he said. “But typically, these reports run upwards of 100 pages. Clearly, there’s a lot of additional information there. In the past, that additional text was often ignored because we didn’t have the computing power to conduct robust research tests on it. An individual could read it, but with advancements in computing we can now aggregate and analyze large pieces of text data. That’s what excites me about it—seeing how that information is used and can be used.”

“Understanding the problems that machine learning presents in trying to predict outcomes is something that I think researchers can help the accounting world untangle,” he added.

Peterson, who joined the accounting department in 2008 after completing his PhD at the University of Michigan, has an impressive research record. Since 2015 he has published five papers in top-tier journals, including The Accounting Review (2), Management Science (1), Contemporary Accounting Research (1) and Review of Accounting Studies (1).

That, coupled with innovative teaching and collegiality, recently earned him the title Stewart Distinguished Professor for 2019.

One of college’s top honors, the Stewart professorship is an annual recognition awarded to an outstanding faculty member who advances the reputation of the college and the business community. Edward Maletis Dean Sarah E. Nutter presented Peterson with the annual award at a ceremony in December 2018.

In a nomination letter authored by Jack O. Rickli Professor of Business and director of the School of Accounting Angela Davis and Charles E. Johnson Memorial Professor of Accounting Steve Matsunaga, the professors outlined Peterson’s accomplishments:

Kyle has also been instrumental in attracting, hiring and retaining outstanding colleagues and developing excellent doctoral students. His steady contributions and commitment to the Lundquist College provide a solid foundation on which our research culture has been built. He is recognized within his field as an innovative and impactful researcher, and well known for his work on accounting complexity.

They also noted his exceptional mentoring and collaboration with current and former doctoral students, citing as an example Peterson’s work with former doctoral student Josh Cutler on voluntary disclosure and securities litigation, now forthcoming in Review of Accounting Studies.

“In meeting different accounting researchers all over the country, I've been impressed with how many of them know Kyle and value his expertise and knowledge,” said Cutler, PhD ’15, now an assistant professor of accounting at the C.T. Bauer College of Business at the University of Houston.

“Kyle not only has very valuable skills and knowledge, but he is also extremely hard-working and dedicated. Although many established scholars want to work with Kyle, an even greater compliment is that he is just as willing to work with and mentor PhD students and young scholars.”

—AnneMarie Knepper-Sjoblom ’05, Lundquist College Communications