AI washing: Strategic disclosure and backlash
Abstract
As firms increasingly exaggerate artificial intelligence (AI) adoption in disclosures, we analyze market responses to unsubstantiated AI claims. Using BERT-based text classification and AI patent data for U.S. firms (2018-2023), we find that such narratives initially attract investors but ultimately yield negative market reactions and sustained underperformance. Results demonstrate market penalties for AI overclaiming through both short-term investor responses and long-term operational outcomes, extending narrative economics to emerging technologies. The study highlights that while narratives can mobilize attention, markets ultimately punish rhetoric that outpaces implementation.
Fields of Study & Subjects
Ethics and Social Impacts of AI
AI in Service Interactions
FinTech
Crowdfunding
Digital Finance
Publication details
- Journal / source
- Finance research letters
- Publisher
- Elsevier BV
- Volume
- 95
- Pages
- 109684–109684
- Publication date
- 25 February 2026
- Language
- EN