How to Talk When a Machine is Listening: Corporate Disclosure in the Age of AI

Growing AI readership (proxied by machine downloads and ownership by AI-equipped investors) motivates firms to prepare filings that are friendlier to machine processing and to mitigate linguistic tones that are unfavorably perceived by algorithms. Loughran and McDonald (2011) and BERT (2018) serve as event studies supporting attribution of the decrease in the measured negative sentiment to increased machine readership. This relationship is stronger among firms with higher benefit (e.g., external financing needs) or lower cost (e.g., litigation risk) of sentiment management. This is the first study exploring the feedback effect on corporate disclosure in response to technology.