Artificial Intelligence and its Breakthrough in the Nordics : A Study of the Relationship Between AI Usage and Financial Performance in the Nordic Market

Sammanfattning: As the fourth digital revolution is initiated and digitalization is becoming increasingly evident in today’s society, the concept of artificial intelligence (AI) is experiencing a boom and is continuously transforming a vast variety of industries. Previous studies have found several links between AI usage and economic benefits, such as increased efficiency and lower costs. Furthermore, such benefits have been connected to financial performance indicators such as return on assets (ROA) and stock return. Additionally, the Nordic countries are known for their flourishing technological environment and the involvement in well-known technology-oriented companies. These underlying factors shaped the interest of exploring the relationship between AI usage and financial performance, as measured by ROA, stock return and the volatility of stock returns. The idea of including these three performance indicators was to get both an internal perspective, as well as a market perspective from an investors point of view while incorporating risk. This census study was conducted by performing three multiple regression models on the companies on Nasdaq OMX Nordic, which resulted in a population of 152 companies. By gathering observations between the years 2015-2019, the total number of observations amounted to 721 for the ROA model, 720 for the stock return model, and 714 for the risk model. The study follows a quantitative research design, with an objective and positivist view in regard to the research philosophical assumptions. Furthermore, a deductive research approach is taken, since previous studies, as well as theories such as the stakeholder and shareholder theories, the disruption theory, the resource-based theory and the dynamic capabilities theory are used to make conclusions. Additionally, the chosen regression model was the OLS model, incorporating the robust function since none of the regressions were fulfilling the assumption of constant variation of the error term. On a 95% confidence interval, all null hypotheses could be rejected, meaning that there was a relationship between AI usage and all performance indicators. However, the relationships were unexpectedly weak and opposing of the researchers’ expectations. As it turns out, internal performance as measured by ROA, as well as market performance measured by stock return proved to have a small negative relationship with ROA. This means that Nordic companies utilizing AI sees a negative impact on financial performance in the short run. However, risk as measured by the standard deviation (SD) of stock returns, showed a positive relationship with AI usage, meaning that investing in companies using AI is riskier. The findings contradict the idea that the economic benefits from AI cause a higher financial performance. However, since AI is just seeing a boom as of recently, it is possible that it might pay off financially in the long run.