Download This PaperHow to Talk When a Machine is Listening: Corporate Disclosure in the Age of AI
Review of Financial Studies, Forthcoming
84 Pages Posted: 14 Sep 2020 Last revised: 22 Mar 2023
There are 2 versions of this paper
How to Talk When a Machine is Listening: Corporate Disclosure in the Age of AI
How to Talk When a Machine is Listening?: Corporate Disclosure in the Age of Ai
Date Written: January 12, 2023
Abstract
Growing AI readership (proxied for by machine downloads and ownership by AI-equipped investors) motivates firms to prepare filings friendlier to machine processing and to mitigate linguistic tones that are unfavorably perceived by algorithms. Loughran and McDonald (2011) and BERT available since 2018 serve as event studies supporting attribution of the decrease in the measured negative sentiment to increased machine readership. This relationship is stronger among firms with higher benefits to (e.g., external financing needs) or lower cost (e.g., litigation risk) of sentiment management. This is the first study exploring the feedback effect on corporate disclosure in response to technology.
Keywords: Machine Learning, AI, Corporate Disclosure, Textual Analysis, Speech Analysis, Feedback Effect
JEL Classification: D83, G14, G30
Suggested Citation: Suggested Citation
