How to Talk When a Machine is Listening?: Corporate Disclosure in the Age of AI
Growing AI readership, proxied by expected machine downloads, motivates firms to prepare filings that are friendlier to machine parsing and processing. Firms avoid words that are perceived as negative by computational algorithms, as compared to those deemed negative only by dictionaries meant for human readers. The publication of Loughran and McDonald (2011) serves as an instrumental event attributing the difference-in-differences in the measured sentiment to machine readership. High machine-readership firms also exhibit speech emotion assessed as embodying more positivity and excitement by audio processors. This is the first study exploring the feedback effect on corporate disclosure in response to technology.
The authors have benefited from discussions with Rui Albuquerque, Elizabeth Blankespoor (discussant), Emilio Calvano (discussant), Lauren Cohen (discussant), Will Cong (discussant), Ilia Dichev, Arup Ganguly (discussant), Jillian Grennan, Rebecca Hann, Bing Han, Kathleen Hanley (discussant), Gerard Hoberg (discussant), Byoung-Hyoun Hwang (discussant), Chris Hennessy, Alan Huang (discussant), Bin Ke (discussant), Michael Kimbrough, Leonid Kogan, Augustin Landier (discussant), Tim Loughran (discussant), Song Ma, Ville Rantala (discussant), Max Rohrer (discussant), Gustavo Schwenkler (discussant), Kelly Shue, Suhas Sridharan, Isabel Wang (discussant), Teri Yohn, Gwen Yu, Dexin Zhou, and comments and suggestions from participants in seminars and conferences at Columbia, ECB, EDHEC, Emory, Georgia State, Harvard, London Business School, Maryland, Michigan, Michigan State, Peking University, Stockholm Business School, Toronto, Utah, Washington, the NBER Economics of Artificial Intelligence Conference, the NBER Big Data and Securities Markets Conference, AFA 2022, the Pacific Center for Asset Management, the SOAR Symposium at Singapore Management University, the Third Bergen FinTech Conference at the NHH Norwegian School of Economics, Machine Learning and Business Conference at University of Miami, RCFS Winter Conference, 11th Financial Markets and Corporate Governance Conference, the China FinTech Research Conference, the Adam Smith Workshop, the Conference on Financing Innovation at Stevens Institute of Technology, FIRS 2021, the Cambridge Alternative Finance Sixth Annual Conference, 2021 CAPANA Research Conference, CICF 2021, and NFA 2021. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
- Mechanical downloads of corporate 10-K and 10-Q filings increased from 360,861 in 2003 to around 165 million in 2016. Companies...
Sean Cao & Wei Jiang & Baozhong Yang & Alan L Zhang & Tarun Ramadorai, 2023. "How to Talk When a Machine Is Listening: Corporate Disclosure in the Age of AI," The Review of Financial Studies, vol 36(9), pages 3603-3642.