Working Paper: NBER ID: w31222
Authors: Andrea L. Eisfeldt; Gregor Schubert; Miao Ben Zhang
Abstract: What are the effects of recent advances in Generative AI on the value of firms? Our study offers a quantitative answer to this question for U.S. publicly traded companies based on the exposures of their workforce to Generative AI. Our novel firm-level measure of workforce exposure to Generative AI is validated by data from earnings calls, and has intuitive relationships with firm and industry-level characteristics. Using Artificial Minus Human portfolios that are long firms with higher exposures and short firms with lower exposures, we show that higher-exposure firms earned excess returns that are 0.4% higher on a daily basis than returns of firms with lower exposures following the release of ChatGPT. Although this release was generally received by investors as good news for more exposed firms, there is wide variation across and within industries, consistent with the substantive disruptive potential of Generative AI technologies.
Keywords: Generative AI; Firm Values; Labor Inputs; ChatGPT; Technology Shock
JEL Codes: E0; G0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Release of ChatGPT (Y70) | Firm value increases (G32) |
| Higher exposure to generative AI (C45) | Firm value increases (G32) |
| Labor substitution by generative AI (J29) | Increased free cash flows (G39) |
| Labor complementarity with generative AI (J49) | Increased free cash flows (G39) |
| Generative AI impacts (C45) | Heterogeneous effects across industries (L69) |
| Generative AI (C45) | Positive impacts in publishing and computing industries (L86) |
| Generative AI (C45) | Negative impacts in finance and transportation sectors (F65) |