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Impact of artificial intelligence investment on firm value

  • S.I.: Artificial Intelligence in Operations Management
  • Published:
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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.

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Acknowledgements

The authors are grateful for the constructive comments of the guest editor and referees on an earlier version of this paper.

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Authors and Affiliations

  1. Department of Business Technology and Entrepreneurship, Swinburne Business School, Swinburne University of Technology, Hawthorn, Australia

    Ariel K. H. Lui & Maggie C. M. Lee

  2. Department of Management and Marketing, The Hong Kong Polytechnic University, Hung Hum, Kowloon, Hong Kong

    Eric W. T. Ngai

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  1. Ariel K. H. Lui
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  2. Maggie C. M. Lee
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  3. Eric W. T. Ngai
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Correspondence to Ariel K. H. Lui.

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Lui, A.K.H., Lee, M.C.M. & Ngai, E.W.T. Impact of artificial intelligence investment on firm value. Ann Oper Res 308, 373–388 (2022). https://doi.org/10.1007/s10479-020-03862-8

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