ChatGPT and Corporate Policies

68 Pages Posted: 26 Jul 2023 Last revised: 16 Feb 2024

See all articles by Manish Jha

Manish Jha

Georgia State University - Department of Finance

Jialin Qian

Georgia State University - Department of Finance

Michael Weber

University of Chicago - Finance; National Bureau of Economic Research (NBER)

Baozhong Yang

Georgia State University - Robinson College of Business

Date Written: February 14, 2024

Abstract

We create a firm-level ChatGPT investment score, based on conference calls, that measures managers’ anticipated changes in capital expenditures. We validate the score with interpretable textual content and its strong correlation with CFO survey responses. The investment score predicts future capital expenditure for up to nine quarters, controlling for Tobin’s q and other determinants, implying the investment score provides incremental information about firms’ future investment opportunities. The investment score also separately forecasts future total, intangible, and R&D investments. High-investment-score firms experience significant negative future abnormal returns. We demonstrate ChatGPT’s applicability to measure other policies, such as dividends and employment.

Keywords: AI, ChatGPT, Corporate Investment, Corporate Policies, Large Language Model, Managerial Expectations, Market Efficiency, Textual analysis

JEL Classification: C81, G14, G31, G32, E22, O33

Suggested Citation

Jha, Manish and Qian, Jialin and Weber, Michael and Yang, Baozhong, ChatGPT and Corporate Policies (February 14, 2024). Chicago Booth Research Paper No. 23-15, Fama-Miller Working Paper , University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2023-103, Available at SSRN: https://ssrn.com/abstract=4521096 or http://dx.doi.org/10.2139/ssrn.4521096

Manish Jha

Georgia State University - Department of Finance ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States

HOME PAGE: http://mjha91.github.io

Jialin Qian

Georgia State University - Department of Finance ( email )

University Plaza
Atlanta, GA 30303-3083
United States

HOME PAGE: http://sites.google.com/view/jialinqian

Michael Weber (Contact Author)

University of Chicago - Finance ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Baozhong Yang

Georgia State University - Robinson College of Business ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States
404-413-7350 (Phone)
404-413-7312 (Fax)

HOME PAGE: http://sites.google.com/view/baozhongyang/

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