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

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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.

Suggested Citation

  • Tao Chen & Shuwen Pi & Qing Sophie Wang, 2025. "Artificial Intelligence and Corporate Investment Efficiency: Evidence from Chinese Listed Companies," Working Papers in Economics 25/05, University of Canterbury, Department of Economics and Finance.
    • Handle: RePEc:cbt:econwp:25/05
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    File URL: https://repec.canterbury.ac.nz/cbt/econwp/2505.pdf
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    More about this item

    Keywords

    Artificial intelligence; AI hiring; investment efficiency;
    All these keywords.

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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