Artificial intelligence is shaping how corporate money professionals write financial reports – on the upside.
A fascinating new report from Florida International University School of Business shows that artificial intelligence is steering corporate financial leaders to the “positive” side of the emotional ledger when reporting company money matters.
The study comes at a time when 51% of CFOs and controllers are using AI in some capacity in 2024, according to a recent Controllers Council study.
FIU analysts tracked corporate executives’ dialogue during earnings conference calls and discovered financial leaders were “more positive and excited in their vocal emotion” if artificial intelligence had a hand in the speechwriting and presentation preparation. The same goes for the way those reports are written.
FIU cites “machine-friendly words and tone” stemming from finance managers who get their written and verbal cues from AI speechwriting and interview preparation applications.
“There’s a change in tone and sentiment,” noted Alan Zhang, assistant professor of finance at FIU Business. “The person [who writes the document] knows which words to use, and the machine [the AI reader program] doesn’t classify them as negative.”
Influenced By AI
Zhang says AI is breaking new ground in influencing how company executives prepare and execute written speeches and texts. More or less, he says, artificial intelligence forces finance executives to communicate company financial news and policies, knowing AI is listening.
“Managers want to portray their business activities and prospects positively to attract or gain stakeholders,” he added. “If the firm discloses a negative report, investors respond negatively and get negative returns.”
If, on the other hand, those same presentations are delivered with a positive tone, companies tend to get better outcomes by “presenting a better image” when using machine learning to prepare speeches, talks, and interviews.
“As a result, in some cases when the SEC posts the disclosure, trades happen more quickly,” said Zhang. “Investors and professional traders are ready to cut the trade as soon as possible.”
Take a quarterly financial report that’s prepared by a CGO or controller. With AI playing a significant role in the research and writing of the report, those executives are more likely to create SEC disclosures that are “machine-friendly” as investors increasingly use AI programs to read company financial documents.
“Humans still train the AI reader and mimic how a human would analyze and understand a document,” Zhang noted. “But it can read filings of thousands of companies more efficiently than a human.”
FIU researched over 359,000 corporate financial reports from 13,700 companies, using the Securities and Exchange Commission’s Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system to gather study data.
With financial executives relying on AI to create corporate reports and investors turning to AI to digest that information, a positive tone by executives can go a long way.
Brian O’Connell, a former Wall Street bond trader and best-selling author, is a prominent figure in the finance industry. With a substantial background as an ex-Wall Street trader, he has authored two best-selling books: ‘The 401k Millionaire’ and ‘CNBC’s Creating Wealth’, demonstrating his profound knowledge of finance and investing.
Brian is also a finance and business writer for esteemed national platforms and publications, including CNN, TheStreet.com, CBS News, The Wall Street Journal, U.S. News & World Report, Forbes, and Fox News.
