Quantifying Generative AI's Influence on European Firm Valuation

Sammanfattning: This paper employs a quantitative approach to evaluate the influence of generative AI workforce exposure on firm value in light of recent AI advancements. We focus on public large-cap companies headquartered in the European Union, analyzing their workforce exposure to these AI technologies. Utilizing an industry-neutral long-short portfolio, our research contrasts the firms with the highest generative AI exposure against those with the lowest. Findings indicate a notable impact on firm valuation up until one month after the release of ChatGPT-3. Moreover, the effects following the release of ChatGPT-4 appear to be greater in comparison to a similar release period, while less definitive due to robustness concerns.