Annual Conference
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Tech, Digital Markets and AI
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May 2025
Firm-Level Input Price Changes and Their Effects: A Deep Learning Approach
We develop firm-level measures of input and output price changes based on textual analysis of earnings calls. Our measures establish five facts: (1) The median firm experiences an increase (decrease) in input prices every 7 (30) months. (2) Input price changes are driven by aggregate and firm specific components. Each component contributes equally. (3) Firms pass through input price changes to output prices in the same quarter with a pass through magnitude of 0.55. (4) Our input price change measure predicts future changes in COGS. (5) Firm stock price reaction is negatively related to our input price change measure.
Keywords:
Input price changes, pass through, Earnings conference calls, deep learning, stock returns