Impact of AI Disclosure on the Financial Reporting and Performance as Evidence from US Banks

Ahmad Alzeghoul and Nizar Mohammad Alsharari ()
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Ahmad Alzeghoul: Department of Accounting, Finance, and Entrepreneurship, College of Business, Jackson State University, Jackson, MS 39217, USA
Nizar Mohammad Alsharari: Department of Accounting, Finance, and Entrepreneurship, College of Business, Jackson State University, Jackson, MS 39217, USA

JRFM, 2024, vol. 18, issue 1, 1-32

Abstract: Purpose: This study examines the impact of artificial intelligence disclosure within the US banking sector. It may explore the implications of AI disclosure on issues like financial reporting, transparency, accountability, and ethical considerations within the banking sector. Design/methodology/approach: Using a blend of qualitative and quantitative analyses, the researchers utilized SEC and NASDAQ databases to scrutinize AI disclosures within the top 10 banks. The sample comprised 100 annual reports, and through multiple regression analysis, the research discerned a noteworthy enhancement in performance metrics. Findings: The study found that AI influences financial performance only when moderated by the interaction of shareholders, the board of directors, and independent board members. The findings indicate a rising trend of AI disclosure in financial reports. The study indicates that AI disclosure impacts NII, TEXP, and P/E. Additionally, the study indicated a conflict of interest between agents and principals. Large shareholders tended to favor more AI disclosures, whereas the board of directors either did not support or adopted a more conservative stance on disclosure. Research limitations/implications: This study acknowledges a limitation in the dataset; initially comprising 100 annual reports, it was later refined to meet regression analysis assumptions. Despite this limitation, the study’s insightful results contribute significantly to our understanding of the dynamic relationship between AI disclosure and the performance of top-tier banks in the USA. Originality/Value: By investigating the impact of AI disclosure, the study aims to provide insights into the broader considerations associated with artificial intelligence disclosures in the US banking sector. This study also analyzes how stakeholders respond to the disclosed information about artificial intelligence.

Keywords: AI; disclosure; financial performance; financial reporting; banks (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2024
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