Whispering Progress: Fear of Automation and Voluntary Disclosure

Abstract

We provide evidence that firms tailor their disclosure policies to achieve the objectives of task automation and workforce stability. Using local cable news transcripts to measure the fear of job displacement due to automation, we find that firms reduce public disclosures about their automation strategies when automation fear intensifies. The diminished disclosure is more pronounced in industries with occupations more susceptible to displacement and when unfavorable employee reactions are more likely. For identification, we exploit two quasi-natural experiments—layoffs by local high-tech firms and the introduction of ChatGPT. We also find suggestive evidence that firms increase private communication with investors to compensate for the reduction in public information provision. Overall, our findings shed light on the trade-offs between maintaining transparency and mitigating adverse employee responses in the era of rapid advancement in automation technologies.

Keywords: Job Displacement, Disclosure, Automation, Robot, Artificial Intelligence

JEL Classification: J4, M4, O3