Speculation in the Age of AI: Measuring AI Wash and Its Valuation Consequences

Activity: Talk or presentationPresentation at conference/workshop/seminar

Description

The escalating discourse on artificial intelligence (AI) has intensified investors' and financial regulators' demands for assessing the authenticity of AI-related disclosures. This paper proposes a novel ranking-based discrepancy measure to quantify AI wash—the divergence between firms' AI-related rhetoric (measured through keyword prominence in earnings calls) and their substantive AI efforts. The results suggest that investors initially overreact to AI wash, leading to short-term overvaluation in the first three quarters following AI wash disclosure. However, this effect reverses over the subsequent seven quarters, suggesting that AI wash ultimately results in long-term valuation corrections. Further analysis reveals that these reversals are more pronounced for firms with lower institutional ownership and higher information asymmetry. Collectively, our results indicate that AI-related disclosures are subject to informational frictions, highlighting the need for greater scrutiny and potential regulatory oversight.
Period10 Nov 2025
Held atZayed University, United Arab Emirates
Degree of RecognitionInternational