Relationship Between Management Policies and Profitability of Manufacturing Companies Listed in the First Section of the Tokyo Stock Exchange (2016 Results)

Ryozo Kitajima; Ryotaro Kamimura; Hiroyuki Sakai

doi:10.52731/iee.v7.i2.597

Ryozo Kitajima Tokyo Polytechnic university https://orcid.org/0000-0002-7826-4802
Ryotaro Kamimura Tokai University https://orcid.org/0000-0002-4238-3463
Hiroyuki Sakai Seikei University

DOI: https://doi.org/10.52731/iee.v7.i2.597

Keywords: management policy, profitability, neural network, feature extraction

Abstract

Management policies are important guidelines for companies; they describe the founding spirit, company motto, and other objectives. Therefore, we consider that management policy may affect a company’s profitability. This study examined management policies from manufacturing companies and extracted keywords that influence profitability.
Management policies and profitability [measured by the return on assets (ROA)] data were collected from annual securities reports, because the report descriptions are accurate, and the reports are easy to obtain. The management policies were written in natural language, and the analysis data were complex; therefore, we used a neural computational method known as “potential learning,” which can interpret internal representations. To extract keywordsthat influence profitability, we designed a classification model of profitability with the management policy as input, and a model with an accuracy of 0.6115 was created. The results suggest that the management policies of highly profitable companies are diverse in using the word “improvement,” which may influence the ROA.

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