Artificial Intelligence and Corporate Investment Efficiency: Evidence from Chinese Listed Companies

Tao Chen, Shuwen Pi and Qing Sophie Wang ()
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Qing Sophie Wang: University of Canterbury, https://www.canterbury.ac.nz

Working Papers in Economics from University of Canterbury, Department of Economics and Finance

Abstract: This study examines the impact of artificial intelligence (AI) on corporate investment efficiency. Our analysis of recruitment data from Chinese listed companies reveals a positive correlation between AI and investment efficiency, primarily driven by a reduction in over-investment. Specifically, a one-standard-deviation increase in AI hiring is associated with a 3.1% improvement in investment efficiency. This improvement results from better investment decisions (e.g., greater responsiveness to growth opportunities and fewer value-destroying mergers and acquisitions), and more effective internal capital allocation (e.g., improvements in innovation and operational efficiency). The positive impact of AI is stronger in firms with less government intervention, flatter organizational structures, technically experienced boards, poorer information environments, and traditional and lowly competitive industries. Overall, our findings highlight the importance of AI skills in shaping corporate investment decisions.

Keywords: Artificial intelligence; AI hiring; investment efficiency (search for similar items in EconPapers)
JEL-codes: G31 G34 O14 O33 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2025-04-01
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