Do Artificial Intelligence applications affect firm stock liquidity? Evidence from China

This study explores the relationship between AI applications and firm stock liquidity. We measure the AI applications of Chinese listed firms based on text analytics on annual reports from 2007 to 2020. Our results show that AI applications increase stock liquidity, and the effect of AI on increasing stock liquidity is more significant in SOEs and high-tech firms. In addition, AI increases stock liquidity by enhancing market attention rather than directly improving firm performance.