The 17th Frontier Forum for Digital Technology and Finance

Abstract：

We explore the role of market feedback in facilitating emerging corporate policies on AI/green technologies. By assembling and analyzing a comprehensive sample of corporate press releases and disclosures in which managers discuss their emerging-technology-related investment plans, we find that firms adjust their AI/green investments upward (downward) in response to favorable (unfavorable) market reactions to such disclosures. This association is more likely due to managerial learning from the market than other alternative explanations, as it gets stronger when market reactions are unfavorable, when outside market participants are more knowledgeable about emerging technologies, and when managers have stronger incentives to promote investments in such fields. The documented investment adjustment is also absent when managers consider nonemerging-technology investment plans. Further, we find that such learning is rewarded by superior long-run operating and stock performance, especially when the feedback is unfavorable. Overall, our paper illustrates the usefulness of tapping the wisdom of the crowd when venturing into uncharted areas and sheds new light on how managerial learning from the market differs across various types of corporate investment.

Speaker Introduction:

Sean Cao, a tenured associate professor in the accounting department of the Robert H.Smith school of business at the University of Maryland. He was once a double-appointed tenured associate professor in the accounting and finance departments of the Robinson College of Business at Georgia State University. Professor Cao's main research areas are: corporate information disclosure and decision-making, financial information data analysis (mainly involving unstructured data processing, deep learning, etc.). His research has been published in top accounting and finance journals such as Journal of Financial Economics, Journal of Accounting Research, The Accounting Review, Contemporary Accounting Research, and IEEE Computer. Many of his research results have been reported at research universities such as Stanford University, Cornell University, University of Virginia, University of Minnesota, and Pennsylvania State University. At the same time, Professor Cao was also invited to participate in seminars of world-renowned companies such as Grant Thornton, Ant Financial, Baidu, and JD.com. Professor Cao currently serves as an invited editor for the big data direction of the top journal Management Science, and is a reviewer for top journals such as Review of Financial Studies, Management Science, Contemporary Accounting Research, MIS Quarterly, Accounting, Organizations and Society.