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  • 2016
  • Working Paper
  • HBS Working Paper Series

The Search for Peer Firms: When Do Crowds Provide Wisdom?

By: Charles M.C. Lee, Paul Ma and Charles C.Y. Wang
  • Format:Print
  • | Language:English
  • | Pages:47
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Abstract

In knowledge-based economies, many business enterprises defy traditional industry boundaries. In this study, we evaluate six "big data" approaches to peer firm identifications and show that some, but not all, "wisdom-of-crowd" techniques perform exceptionally well. We propose an analytical framework for understanding when crowds can be expected to provide wisdom and show, theoretically and empirically, that their efficacy is related to crowd sophistication and task complexity. Consistent with this framework, we find that a "crowd-of-crowds" approach, which combines EDGAR user co-searches and analyst co-coverage, dominates other state-of-the-art methods for identifying investment benchmarks.

Keywords

Peer Firm; Edgar Co-search; Analyst Co-coverage; Wisdom Of Crowds; Performance Benchmarking; Crowd Of Crowds; Search Technology; Accounting

Citation

Lee, Charles M.C., Paul Ma, and Charles C.Y. Wang. "The Search for Peer Firms: When Do Crowds Provide Wisdom?" Harvard Business School Working Paper, No. 15-032, October 2014. (Revised November 2016.)
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About The Author

Charles C.Y. Wang

Accounting and Management
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Related Work

    • 2016
    • Faculty Research

    The Search for Peer Firms: When Do Crowds Provide Wisdom?

    By: Charles M.C. Lee, Paul Ma and Charles C.Y. Wang
Related Work
  • The Search for Peer Firms: When Do Crowds Provide Wisdom? By: Charles M.C. Lee, Paul Ma and Charles C.Y. Wang
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