Generative AI and Firm Values

68 Pages Posted: 9 May 2023

See all articles by Andrea L. Eisfeldt

Andrea L. Eisfeldt

UCLA Anderson School of Management

Gregor Schubert

UCLA Anderson School of Management

Miao Ben Zhang

University of Southern California - Marshall School of Business - Finance and Business Economics Department

Multiple version iconThere are 2 versions of this paper

Date Written: May 2, 2023

Abstract

What are the effects of recent advances in Generative AI on the value of firms? Our study offers a quantitative answer to this question for U.S. publicly traded companies based on the exposures of their workforce to Generative AI. Our novel firm-level measure of workforce exposure to Generative AI is validated by data from earnings calls, and has intuitive relationships with firm and industry-level characteristics. Using Artificial Minus Human portfolios that are long firms with higher exposures and short firms with lower exposures, we show that higher-exposure firms earned excess returns that are 0.4% higher on a daily basis than returns of firms with lower exposures following the release of ChatGPT. Although this release was generally received by investors as good news for more exposed firms, there is wide variation across and within industries, consistent with the substantive disruptive potential of Generative AI technologies.

Keywords: Artificial Intelligence, Generative AI, Chat GPT, Corporate Valuations, Equity Returns, Technological Change

JEL Classification: G00, E00, J24, O31

Suggested Citation

Eisfeldt, Andrea L. and Schubert, Gregor and Zhang, Miao Ben, Generative AI and Firm Values (May 2, 2023). Available at SSRN: https://ssrn.com/abstract=4436627 or http://dx.doi.org/10.2139/ssrn.4436627

Andrea L. Eisfeldt (Contact Author)

UCLA Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

HOME PAGE: http://https://sites.google.com/site/andrealeisfeldt/

Gregor Schubert

UCLA Anderson School of Management ( email )

Los Angeles, CA 90095-1481
United States

HOME PAGE: http://https://www.anderson.ucla.edu/faculty-and-research/finance/faculty/gregor-schubert

Miao Ben Zhang

University of Southern California - Marshall School of Business - Finance and Business Economics Department ( email )

Marshall School of Business
Los Angeles, CA 90089
United States

HOME PAGE: http://www.MiaoBenZhang.com/

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