Working papers

Producing AI innovation and its value implications, 2023, with Ali Ahmadi, Roni Michaely, and Phuong-Anh Nguyen

Abstract: We document that artificial intelligence accounts for a significant and growing share of aggregate innovation produced during the past three decades, and is now diffuse across industries and technology fields. We then study publicly traded firms, finding that firms direct their production of innovation toward AI, motivated by their own, and their customers', labor's exposure to AI technology. We interact exogenously measured innovation capacity and AI exposure to instrument actual AI production. Our central findings are that producing AI increases a firm's future stock returns, supported by both higher profitability and lower risk. The results suggest that AI production increases firm value.

Updated draft coming soon. EFA draft available here.

Do analysts' preferences affect corporate policies?, 2013, with François Degeorge, François Derrien, and Sébastien Michenaud

Abstract: Technology spillovers across firms affect firm value, according to prior research, so information about them should matter to investors. We argue that technology spillovers increase the complexity and uncertainty of value relevant information about the firm, which makes information processing more costly, discourages it, and thereby increases information asymmetry between managers and investors. We find that not only does information asymmetry increase, but institutional ownership and analyst coverage both decrease, and uncertainty increases. We also find that investors underestimate long-term earnings, consistent with the positive abnormal stock returns that we also find.