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The impact of generative AI on information processing: Evidence from the ban of ChatGPT in Italy

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  • Bertomeu, Jeremy
  • Lin, Yupeng
  • Liu, Yibin
  • Ni, Zhenghui

Abstract

This paper explores how the emergence of generative artificial intelligence is reshaping the information environment in capital markets. Leveraging an unexpected ban on ChatGPT in Italy, we examine its impact on the information processing capabilities of market participants. We employ metrics for AI-generated text detection to show that the ban coincides with decreased AI usage by domestic financial analysts and fewer earnings forecasts issued relative to foreign analysts covering the same firm. The negative effects are more pronounced among analysts whose pre-ban reports are more consistent with AI use or analysts with a technical background. The ban also diminishes forecast accuracy, increases reliance on industry-specific information, and reduces information efficiency. Furthermore, investor reactions to earnings announcements become more pronounced, and bid–ask spreads widen, reflecting lower market efficiency.

Suggested Citation

  • Bertomeu, Jeremy & Lin, Yupeng & Liu, Yibin & Ni, Zhenghui, 2025. "The impact of generative AI on information processing: Evidence from the ban of ChatGPT in Italy," Journal of Accounting and Economics, Elsevier, vol. 80(1).
    • Handle: RePEc:eee:jaecon:v:80:y:2025:i:1:s0165410125000187
    DOI: 10.1016/j.jacceco.2025.101782
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    Keywords

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    JEL classification:

    • O00 - Economic Development, Innovation, Technological Change, and Growth - - General - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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