Key Areas of Research
How to Talk When a Machine Is Listening: Corporate Disclosure in the Age of AI
The Review of Financial Studies, March 2023
Growing AI readership (proxied for by machine downloads and ownership by AI-equipped investors) motivates firms to prepare filings friendlier to machine processing and to mitigate linguistic tones that are unfavorably perceived by algorithms. Loughran and McDonald (2011) and BERT available since 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 benefits to (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.
Sean Cao, Associate Professor (with tenure), Robert H. Smith School of Business, University of Maryland, United States of America
Seductive Language for Narcissists in Job Postings
Management Science
Prior research indicates that narcissistic executives engage in earnings management and other negative organizational behaviors, and many studies ponder why firms hire such individuals, especially into corporate accounting positions. Utilizing a selection of terms from real-world job postings that we characterize as either describing a “Rule-Bender” or “Rule-Follower" candidate, we first conduct several validation studies which reveal that these terms vary predictably across types of job postings, that people generally agree with our categorization of these terms, and that Rule-Benders are viewed as possessing worse managerial skills but a higher proclivity for unethical behavior. We then demonstrate that narcissistic job seekers are more attracted to job postings that describe the ideal candidate using Rule-Bender terms for both general positions (Experiment 1) and senior accounting positions (Experiment 2). Finally, we examine firm characteristics that might lead professional recruiters to incorporate Rule-Bender language into Chief Accounting Officer job postings and find that Rule-Bender terms are preferred for higher-growth, higher-innovation firms (Experiment 3), and when more aggressive reporting would benefit the firm (Experiment 4). Our results suggest that recruiters’ language choices can attract Rule-Bending narcissists to firms, perhaps even in unintended circumstances.
Jonathan Gay (University of Mississippi), Scott Jackson (University of South Carolina), Nick Seybert (University of Maryland)