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Impact of artificial intelligence investment on firm value

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  • Ariel K. H. Lui

    (Swinburne University of Technology)

  • Maggie C. M. Lee

    (Swinburne University of Technology)

  • Eric W. T. Ngai

    (The Hong Kong Polytechnic University)

Abstract

As artificial intelligence (AI) has recently gained momentum and attention, the interest and investment in AI have also accelerated. However, the impact of AI on firm value is rarely discussed. On the basis of the 119 announcements of 62 listed firms who have invested in AI, this study finds that AI investment has a negative impact on the firms’ market value. The stock prices of the firms decrease by 1.77% on the day of the announcement. Nonmanufacturing firms and firms with weak information technology capabilities or low credit ratings suffer a more negative impact compared with other firms. The findings suggest that investors perceive AI investment announcements to be unwelcome news for the majority of firms. Subsequently, the characteristics affecting the shareholders’ reaction towards AI adoption are presented. This research offers one of the first empirical evidence about the market value of AI and provides a reference for firms interested in investing in AI.

Suggested Citation

  • Ariel K. H. Lui & Maggie C. M. Lee & Eric W. T. Ngai, 2022. "Impact of artificial intelligence investment on firm value," Annals of Operations Research, Springer, vol. 308(1), pages 373-388, January.
    • Handle: RePEc:spr:annopr:v:308:y:2022:i:1:d:10.1007_s10479-020-03862-8
    DOI: 10.1007/s10479-020-03862-8
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    2. Lívia Kelebercová & Michal Munk & František Forgáč, 2023. "Could You Understand Me? The Relationship among Method Complexity, Preprocessing Complexity, Interpretability, and Accuracy," Mathematics, MDPI, vol. 11(13), pages 1-15, June.
    3. Gong Cheng & Eric Jondeau & Benoit Mojon & Dimitri Vayanos, 2023. "The impact of green investors on stock prices," BIS Working Papers 1127, Bank for International Settlements.
    4. Yaliu Yang & Yuan Wang & Yingyan Zhang & Conghu Liu, 2022. "Data-Driven Coupling Coordination Development of Regional Innovation EROB Composite System: An Integrated Model Perspective," Mathematics, MDPI, vol. 10(13), pages 1-25, June.
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    6. Konstantinos Mira & Francesca Bugiotti & Tatiana Morosuk, 2023. "Artificial Intelligence and Machine Learning in Energy Conversion and Management," Energies, MDPI, vol. 16(23), pages 1-36, November.
    7. Mejd Aures BENLALA, 2023. "Exploring Risks and Issues Related to Policy Making and Regulation in FinTech," Perspectives of Law and Public Administration, Societatea de Stiinte Juridice si Administrative (Society of Juridical and Administrative Sciences), vol. 12(2), pages 249-255, June.

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