Jeremy Bertomeu (Washington U – John M. Olin Business School, Yupeng Lin (NUS), Yibin Liu (same), and Zhenghui Ni (same) have posted “Capital Market Consequences of Generative AI: Early Evidence from the Ban of ChatGPT in Italy” on SSRN. Here is the abstract:
On March 31st, 2023, the Italian data protection authority found that ChatGPT violated data protection laws and banned the service in Italy, providing a natural experiment to assess the economic consequences of generative AI. Leveraging this event, we show that Italian firms with greater exposure to the technology exhibit an underperformance of around 9% compared to firms with lower exposure throughout the ban period. We observe a more significant negative impact on stock value for smaller and newly established companies, supporting a linkage to creative destruction. Bid-ask spreads widen during the ban, particularly for firms with fewer institutional investors, limited analyst coverage, and a lower presence of foreign investors. The evidence suggests a dual role of ChatGPT in enhancing firm productivity and investor information processing.