LIS Reality Check

Divergence Calculation

The divergence score measures the gap between what leaders say and what actually happens. It is calculated in three steps:

1. Speech sentiment is extracted from AGM chairman/CEO addresses using NLP and scaled to a -100 to +100 range (e.g. a sentiment score of +0.65 becomes +65).
2. Reality score blends 1-year stock return (60% weight) and net profit change (40% weight) into a single -100 to +100 value. When only one metric is available, it is used at 100% weight.
3. Divergence = Speech sentiment − Reality score. A positive result means the speech was more optimistic than performance warranted; negative means performance exceeded the speech tone.

Example: A chair with sentiment +0.55 (= +55) for a company with 1Y return of -30% and profit change of -20% → Reality = (-30 × 0.6) + (-20 × 0.4) = -26 → Divergence = 55 − (-26) = 81 (over-optimistic).

Classification Thresholds

• Over-optimistic (divergence ≥ +20): Speech tone significantly more positive than actual returns and profits
• Under-selling (divergence ≤ -20): Actual performance significantly better than speech tone suggests
• Aligned (|divergence| < 20): Speech sentiment broadly matches company performance

Data Sources

Speech analysis from NZX AGM announcements via NLP extraction. Stock returns from market data. Financial results from NZX company announcements. This analysis is automated and may not capture nuance or context — use as a starting point for further research, not a definitive assessment.