Artificial Intelligence and Firm Performance: Does Machine Intelligence Shield Firms from Risks?

Linh Tu Ho, Christopher Gan, Shan Jin and Bryan Le
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Linh Tu Ho: Department of Financial and Business Systems, Faculty of Agribusiness & Commerce, Lincoln University, Christchurch 7647, New Zealand
Christopher Gan: Department of Financial and Business Systems, Faculty of Agribusiness & Commerce, Lincoln University, Christchurch 7647, New Zealand
Shan Jin: Department of Financial and Business Systems, Faculty of Agribusiness & Commerce, Lincoln University, Christchurch 7647, New Zealand
Bryan Le: Department of Global Value Chains and Trade, Faculty of Agribusiness & Commerce, Lincoln University, Christchurch 7647, New Zealand

JRFM, 2022, vol. 15, issue 7, 1-20

Abstract: We estimate and compare the impact of the coronavirus pandemic (COVID-19) on the performance of Artificial Intelligence (AI) and conventional listed firms using stock market indices. The single-group and multiple-group Interrupted Time-Series Analyses (ITSA) with panel data were used with four interventions: when the news of COVID-19 spread and the pandemic entered the first, second, third, and fourth months (24 February 2020, 23 March 2020, 20 April 2020, and 18 May 2020, respectively). The results show that the negative impact of COVID-19 on the AI stock market was less severe than on the conventional stock market in the first month of the pandemic. The performance of the AI stock market recovered quicker than the conventional stock market when the pandemic went into its third month. The results suggest that the AI stocks were more resilient than conventional stocks when the financial market was exposed to uncertainty caused by the COVID-19 pandemic. The deployment of AI in firms serves as a resilient, crucial driver for sustainable performance in challenging environments. Observing the performance of AI-adopted firms is an interesting direction for technical and fundamental analysts. Investors and portfolio managers should consider an AI market index to minimize risk or invest in stocks of AI-adopted listed firms to maximize excess returns.

Keywords: AI; artificial intelligence; ITSA; pandemic; stock performance; risk management (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2022
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