  Company disclosures greatly aid in the process of financial decision-making;
therefore, they are consulted by financial investors and automated traders
before exercising ownership in stocks. While humans are usually able to
correctly interpret the content, the same is rarely true of computerized
decision support systems, which struggle with the complexity and ambiguity of
natural language. A possible remedy is represented by deep learning, which
overcomes several shortcomings of traditional methods of text mining. For
instance, recurrent neural networks, such as long short-term memories, employ
hierarchical structures, together with a large number of hidden layers, to
automatically extract features from ordered sequences of words and capture
highly non-linear relationships such as context-dependent meanings. However,
deep learning has only recently started to receive traction, possibly because
its performance is largely untested. Hence, this paper studies the use of deep
neural networks for financial decision support. We additionally experiment with
transfer learning, in which we pre-train the network on a different corpus with
a length of 139.1 million words. Our results reveal a higher directional
accuracy as compared to traditional machine learning when predicting stock
price movements in response to financial disclosures. Our work thereby helps to
highlight the business value of deep learning and provides recommendations to
practitioners and executives.
