The Impacts of Research and Development In Artificial Intelligence (AI) Industry on Company’s Financial Risk Control In China

Abstract

Artificial Technology in financial area has triggered a hot discussion about its influence. Previous research proved that the relationship between AI technology and company’s stock risk control can be either positive or negative. Our research will demonstrate whether its impact in China’s company is positive or negative. We collect thousands of companies’ data, which using Research and Development (R&D) expense as the proxy of inputs of AI and volatility as the proxy of stock risk of companies to test the hypothesis. And I use a regression equation to demonstrate the impact of RD to volatility, as a consequence, I find that RD and volatility has a negative relationship, while volatility is more driven by other factors, such as ROA, financial leverage and total market value. This study combines AI with financial risk and uses data to demonstrate the thesis statement later, which can be regarded as empirical research. So it has value and is supportive to develop further research of the relationship between these two variables.