AC 420 – Introduction to Financial Analytics

BU Boston University
Boston University Questrom
School School of Business
of Management

AC 420 – Introduction to Financial Analytics

Lynn Li

[Please be sure to read this Syllabus thoroughly prior to your 1st class session!]
[I know it is long, but it is an essential guide for the course!]

I. Course Administrative Details

 instructor: Dr. Lynn Li, 524A, lynnli@bu.edu, 617-358-6284
 office hours: Thursday from 1:50-2:50PM and by appointment
 pre-requisites: A successful completion of FE 323, Financial Management.
 course dates/times/location:
o A1: Tuesday/Thursday, 9:30-10:45AM, HAR 410
o B1: Tuesday/Thursday, 11-12:15PM, HAR 410

II. Course Description, Learning Goals, Structure, Diversity & Inclusion, & Materials

II.1. Course Description & Learning Goals

 Course Description and Objective
o The world of business is deluged by data. This course will equip you with tools, skills, concepts, and
techniques in data analytics in accounting, finance, and economics to understand fundamental
business issues. You will be introduced to the framework of dealing with big data in a business, and
to understand problems and evaluate solutions using data and analysis. Students will be working with
financial reporting and capital market datasets, and designing and critiquing statistical analyses for
financial decision-making.
o The course will provide skills to define, classify, and structure datasets focused on financial reporting
and financial market data and use such data to analyze and predict corporate and market outcomes,
as well as identify the limitations of such analyses.
o There are 5 core learning objectives. In particular, students will be able to:
 define and identify key financial reporting and financial market data (collectively, “financial
data”) elements
 aggregate and manipulate financial data into temporal and cross-sectional datasets
 identify (and correct where possible) errors and biases in the datasets
 develop and apply basic statistical techniques to these datasets
 critically assess the insights of these statistical analyses, and use these insights for decision-
making

II.2. Course Structure & Pedagogy

 Concepts to be Taught:
o Introduces the concepts of earnings management and fraud.
o Introduces quantitative data from the Balance Sheet, Income Statement
o Introduces qualitative data related to readability of financial statements
o Introduce key vocabulary and concepts related to Stock Prices, Stock Returns, Trading Volume, Stock
1 of 6
AC 420 – Introduction to Financial Analytics

Indices (market index), Risk (Beta as well as other possible risk factors), Weighted-Average Cost of
Capital, Event Studies, Yield Curves
o Introduces the technical concepts of Blockchain
 Data Sources Used in the Course:
o Wharton Research Data Services (WRDS): Username: ac420bu22 Password: QuestromAC420
 Compustat-Capital IQ: Fundamental Annual & Execucomp
 CRSP
 Eventus
 MSCI
o SEC AAER Datasets
o SEC Edgar Datasets
 10-K and 10-Q: I/S, B/S, SCF
 DEF 14A: Executive Compensation
o FOG Index, Bog Index, and other dictionaries for textual analysis
o Yahoo Finance for financial statements (with caveats), summary financial and market ratios, historical
stock prices/returns/volume, textual analysis of message/conversation posts
o Department of Treasury and the Federal Reserve Datasets on Yield Curve
o Kenneth French Data Library for Fame-French Factor Models
o CoinMarketCap for Bitcoin, Ethereum, etc.

II.3. Diversity & Inclusion Statement

 In developing this course, I have aimed to be thoughtful about how identity and culture impact the course content.
 I invite you to share your personal experiences and perspective related to the course content. If there are topics or
conversations that you feel would benefit from incorporation of social context, a differing perspective, or
Questrom’s Office of Diversity & Inclusion, please inform me and I will explore resources and opportunities for us
to engage a wide variety of perspectives in our classroom.

II.4. Course Materials:

 Powerpoint Slides and Handouts can be accessed via QuestromTools.
 Data Analytics Tool: Tableau
 Supplemental Information: YouTube “Bite Size Accounting”

III. Course Policies

III.1. Attendance Policy
 Although a number of sessions will be straight lectures, there will be ample opportunities for students to
participate in class discussions. Students are strongly encouraged to actively participate in a professional manner
by asking questions and by positively contributing to the class discussion. Class participation provides the
opportunity to practice skills in public speaking and listening, as well as to hone the ability to logically develop
arguments supporting your line of reasoning.

III.2 Academic accommodations for students with special needs

 In keeping with University policy, any student with a disability who needs or thinks they need academic
accommodations must call the Office of Disability Services at 617-353-3658 or stop by 19 Deerfield Street to arrange
a confidential appointment with a Disability Services staff member. Accommodation letters must be delivered to
your instructor in a timely fashion (not later than two weeks before any major examination). Please note that
accommodations will not be delivered absent an official letter of accommodation.

2 of 6
AC 420 – Introduction to Financial Analytics

III.3. Academic Integrity Policy

 All students are expected to fully comply in action and in spirit with the Boston University Academic Conduct
Code. This code of conduct can be found at the following link and is considered to be an addendum to this
syllabus: https://www.bu.edu/academics/policies/academic-conduct-code/
 Penalties for violating the code may range from a zero grade on a test or assignment, to an appearance before
the Academic Conduct Committee, which might result in expulsion from Boston University.

III.4 Sexual Misconduct/Title IX Policy

 The Questrom School of Business is committed to fostering a safe learning environment for all members of its
community and preventing sexual misconduct. All forms of sexual misconduct, including rape, acquaintance
rape, sexual assault, domestic and dating violence, stalking, and sexual harassment are violations of Boston
University’s policies, whether they happen on campus or off campus.
 Title IX of the Education Amendments of 1972 is a federal civil rights law that prohibits sex-based discrimination
in federally funded education programs and activities. This law makes it clear that violence and harassment
based on sex and gender is a Civil Rights offense subject to the same kinds of accountability and the same kinds
of support applied to offenses against other protected categories such as race, national origin, etc. If you or
someone you know has been harassed or assaulted, you can find the appropriate resources at
http://www.bu.edu/safety/sexual-misconduct/

III.5. Professional Conduct Policy

 Students are expected to arrive to class prior to the scheduled start time and stay in the classroom, or Zoom
session, until the completion of the class. Arriving to class late and departing early is a distraction to the
instructor and other students. If you need to arrive to class late or depart class early, you should notify your
instructor in advance.
 Mobile phones, laptop computers, and tablet computers should only be used for class purposes. If there is no
class purpose for their use, they should be turned off and stowed away.

III.6. Document Retention Policy

 Exam answers and other major submissions will be retained for 5 months after the exam date or submission
date. After this time, the documents will be disposed.

III.7. Course Recording Policy

 All class sessions will be recorded for the benefit of registered students who are unable to attend live sessions
(either in person or remotely) due to illness or other special circumstances. Recorded sessions will be made
available to registered students ONLY via their password-protected QuestromTools account. Students may
not share such sessions with anyone not registered in the course and may certainly not repost them in a
public platform. Students have the right to opt-out of being part of the class recording. Please contact your
instructor or teaching assistant to discuss options for attending the course in such cases. More information
on this topic is available at https://digital.bu.edu/lfa-classroom-recordings/.

IV. Course Evaluation & Expectations

IV.1. Course Evaluation

 Grading will be based on the following:
o Evaluation Activity Fraction of Course Grade
Mid-Term Exam 30%
Final Project 15%
Contribution 20%
Homework Assignments 35%
TOTAL 100%

3 of 6
AC 420 – Introduction to Financial Analytics

o Final course grades will be the result of a direct mathematical computation, based on the formula above.
o Questrom’s Grading Guidelines for Required UG Courses:
25-35% of students can expect to receive A’s (for excellent work)
50-65% of students can expect to receive B’s (for good or very good work)
5-20% of students can expect to receive C’s or below (for adequate or poor work)
o Questrom’s Grading Guidelines for Electives UG Courses:
The target average course GPA is approximately 3.25 (about a B+)
o If you have any questions about grades that you receive on particular assignments, you must raise them within
5 business days of receiving your grade on that assignment. Unless we have made computational errors, we
will be unable to alter grades after final grades have been determined. If you have particular grade-related
considerations that you think are important, please raise these with your instructor as early as possible (during
the first half of the semester at the latest!), so that your instructor can help you approach the course in a way
that will help you achieve your best possible performance.

IV.2. Assignment Descriptions & Expectations

 Assignments: Students are expected to collaborate on written assignment. However, if it is an individual assignment
you must turn in your own assignment.
 Exam: One closed-book, closed-notes in class midterm will take place and will be based on material covered in
the lecture and assigned problems. There will be NO MAKE-UP EXAMS.
 Team Project:
o Students are expected to complete Team Project and present their analyses during the end of the course.
Each team will be assigned balanced by concentration and interest.

V. Questrom Community Statement of Norms

In addition to the expectations outlined by Boston University, we expect all members of tour Questrom community to
adhere to the following classroom norms:
 Attend classes in-person. There is no provision for remote attendance for undergraduate classes for academic
year 2021-2022.
 Wear appropriate personal protection equipment (PPE) face covering when in the Hariri building, including
in the Harari classrooms and offices. Students not wearing a face covering will be asked to leave and are
expected to comply with the request.
 At all times during the semester, student (and faculty and staff) must be compliant with the vaccination and
testing protocols as outlined by Boston University.
 Follow all eating and drinking regulations.

Adhering to these norms will allow us to continue to enjoy a residential learning experience.

4 of 6
AC 420 – Introduction to Financial Analytics

VI. Tentative Course Outline (Subject to Revision)

Session T Th Topic Details Homework

1/20 Data Analytics and Its
1 Course Overview
Importance
1/25 Information Contents of Earnings Management
2
Earning
1/27 Information Contents of
3 Revenue Management
Earning
2/1 Information Contents of Assignment 1: Revenue
Earning Management
4 Expense Management
Data: SEC Edgar / AAER/
Press Releases
2/3 Information Contents of
5
Earning/Fraud
2/8 Fraud Assignment 2: Fraud
detection
6 M-Score and Benford’s Law
Data: WRDS Compustat
Fundamental Quarterly
2/10 Earnings Management and
7
Fraud Presentation
8 2/15 Identifying Peer Companies Industry Measures
2/17 Application to Executive
9 Identifying Peer Companies
Compensation
Assignment 3: Executive
10 2/24 Identifying Peer Companies Introduction to Tableau Compensation
Data: Compustat ExecuComp
Last Day to Drop Standard Courses without a “W” Grade
3/1 Qualitative vs Quantitative
11 Textual Analysis Textual Analysis
Disclosure
3/3 Assignment 4: Textual
12 Textual Analysis Analysis
Data: BOG Index; FOG Index
3/5-3/13 Spring Break! Have fun!
3/15 Assignment 5: Calculating
13 Market Measurement CAPM/CAPM Calculation CAPM
Data: Yahoo Finance
14 3/17 Market Measurement WACC
15 3/22 Exam (To Textual Analysis) In Class
3/24 Assignment 6: Fraud Event
Studies
16 Market Measurement Event Studies
Data: SEC Edgar/ Compustat
Event Studies
3/29 Debt vs Equity, Stock
17 Capital Structure
Buyback
18 3/31 Yield Curves; ESG Yield Curves
4/1 Last Day to Drop Standard Courses with a “W” Grade
4/5 KLD and ESG Portfolio Assignment 7: KLD and ESG
19 ESG
Formation
5 of 6
AC 420 – Introduction to Financial Analytics

4/7 Pitfalls of Blockchain in

20 Blockchain
Accounting
4/12 Pitfalls of Blockchain in Assignment 8: Blockchain
21 Blockchain
Accounting
4/14 Technical Details of
22 Blockchain
Blockchain
23 4/19 Final Project Discussion
24 4/21 Blockchain Presentation
25 4/26 Student Presentation
26 4/28 Student Presentation
27 5/3 Student Presentation

6 of 6