Abstract
We present a compact overview of machine learning applications in financial accounting and audit research as well as management accounting research. Here, the application of machine learning has the potential to provide novel insights into empirical data and to improve predictive performance. We highlight the potential use of deep learning to process unstructured and structured data more efficiently and a greater focus on model interpretability as viable opportunities for future research.
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Notes
- 1.
Sometimes, targets are synonymously referred to as “labels,” “annotations,” “responses,” or simply “outputs.”
- 2.
AAERs contain financial statements with fraudulent account balances identified within two years after the audited financial statement was released (e.g., Green & Choi, 1997).
- 3.
For more information about social media analytics, see Kinra et al. (2022).
- 4.
Of course, random choice would result in a fifty percent chance of making the correct prediction due to the balanced dataset.
- 5.
For example, counting the classification predictions of each model and selecting the majority class.
- 6.
Undersampling means randomly deleting cases from the majority class (i.e., non-fraudulent cases in the context of fraud detection). In contrast, oversampling results in the duplication of cases in the minority class (i.e., fraudulent cases in the context of fraud detection). Undersampling, as compared to oversampling, is more effective against class and cost imbalances (Drummond & Holte, 2003).
- 7.
The curse of dimensionality describes that a complete search for an optimal solution on the entire feature space is becoming computationally harder with every additional feature (Bellman, 1961).
- 8.
Target prediction on novel data, i.e., data not used in the training process.
- 9.
Genetic algorithms are inspired by natural selection, meaning a model evolves through generations and the allowance for random mutations, which will be kept if they serve the model objective.
- 10.
Yelp is a crowd-sourced platform for business reviews.
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Fieberg, C., Hesse, M., Loy, T., Metko, D. (2022). Machine Learning in Accounting Research. In: Hornuf, L. (eds) Diginomics Research Perspectives. Advanced Studies in Diginomics and Digitalization. Springer, Cham. https://doi.org/10.1007/978-3-031-04063-4_6
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