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Financial risk and technology shifting: Firm-level evidence from the rise of AI

Author

Listed:
  • Andrea Bacchiocchi

    (Department of Economics, Society and Politics, University of Urbino Carlo Bo)

  • Germana Giombini

    (Department of Economics, Society and Politics, University of Urbino Carlo Bo)

  • Ludovica Segneri

    (Department of Economics, Society and Politics, University of Urbino Carlo Bo)

  • Francesco Venturini

    (Department of Economics, Society and Politics, University of Urbino Carlo Bo)

Abstract

Does financial risk affect the firm decision to develop a new technology? We study this issue in the context of the take-off of Artificial Intelligence (AI). Using data on 28,000 Italian firms (2012–2019) matched with patent records, we find that companies handling higher cash-flow volatility are significantly more likely to innovate in AI. The role of financial risk is weaker for relatively more mature technologies, suggesting that firms more subject to financial uncertainty are more willing to undertake innovation in high-uncertainty, high-reward domains and drive frontier technological change.

Suggested Citation

  • Andrea Bacchiocchi & Germana Giombini & Ludovica Segneri & Francesco Venturini, 2026. "Financial risk and technology shifting: Firm-level evidence from the rise of AI," Mo.Fi.R. Working Papers 199, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
    • Handle: RePEc:anc:wmofir:199
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    Keywords

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    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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