Analyzing the market's reaction to AI narratives in corporate filings
Anup Basnet,
Maxim Elias,
Galla Salganik-Shoshan,
Thomas Walker and
Yunfei Zhao
International Review of Financial Analysis, 2025, vol. 105, issue C
Abstract:
The recent surge in artificial intelligence (AI) interest and investment, driven by advances in large language models, has led the market to reward adopters and penalize laggards. Yet, AI integration predates this “AI gold rush,” with earlier adopters reaping significant benefits. Drawing on a 2005–2018 sample, a formative period before AI became mainstream, this paper examines how early AI adoption and its disclosure in corporate filings affect U.S. firms. Analyzing 10-K filings, we categorize AI-related mentions as actionable, speculative, or irrelevant. We establish causal links between these disclosures and firm value, with innovation and productivity as likely channels. Our findings indicate that markets distinguish between substantive AI initiatives and opportunistic signaling, swiftly pricing anticipated future gains. Actionable disclosures outlining clear implementation plans yield significant valuation benefits, particularly upon first introduction, whereas speculative or irrelevant disclosures have no impact. Moreover, firms with substantive AI disclosures subsequently increase innovation activities, evidenced by higher R&D spending and patent filings, which are a key step in a pathway to modest, lagged productivity gains and ultimately improved valuation. We further find that these innovation activities act as concurrent signals of strategic reorientation towards AI, reinforcing the market's swift positive valuation. We show that early adopters of actionable disclosures gain competitive advantages, while peers that either remain silent or offer only vague AI disclosures face market penalties. These findings highlight that the strategic communication of genuine technological initiatives can significantly impact a company's perceived value and competitive positioning in the market.
Keywords: Narrative; Artificial intelligence; Corporate disclosure; Firm value; Textual analysis (search for similar items in EconPapers)
JEL-codes: G10 G30 G40 O30 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:
Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S105752192500465X
Full text for ScienceDirect subscribers only
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:105:y:2025:i:c:s105752192500465x
DOI: 10.1016/j.irfa.2025.104378
Access Statistics for this article
International Review of Financial Analysis is currently edited by B.M. Lucey
More articles in International Review of Financial Analysis from Elsevier
Bibliographic data for series maintained by Catherine Liu ().