Automated explanation of financial data

  • Authors:

  • H. A. M. Daniels;E. A. M. Caron

  • Affiliations:

  • Center for Economic Research, Tilburg University, PO Box 90153, 5000 LE, Tilburg, The Netherlands and Erasmus Research Institute of Management, Erasmus University Rotterdam, PO Box 1738, 3000 DR, ...;Erasmus Research Institute of Management, Erasmus University Rotterdam, PO Box 1738, 3000 DR, Rotterdam, The Netherlands

  • Venue:
  • International Journal of Intelligent Systems in Accounting and Finance Management - Risk Analysis in Complex Systems: Intelligent Systems in Finance
  • Year:
  • 2009

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Abstract

We describe a methodology for explanation generation in financial knowledge-based systems. This offers the possibility to generate explanations and diagnostics automatically to support business decision tasks. The central goal is the identification of specific knowledge structures and reasoning methods required to construct computerized explanations from financial data and models. A multistep look-ahead algorithm is proposed that deals with so-called cancelling-out effects, which are a common phenomenon in financial data sets. Our method is an extension of the traditional variance decomposition in accounting. The method was tested on a case-study conducted for Statistics Netherlands involving the comparison of financial figures of firms in the Dutch retail branch. Copyright © 2009 John Wiley & Sons, Inc.