The Impact of Artificial Intelligence Disclosure on Financial Performance

This study determines to what extent Jordanian banks refer to and use artificial intelligence (AI) technologies in their operation process and examines the impact of AI-related terms disclosure on financial performance. Content analysis is used to analyze the spread of AI and related information in the annual report textual data. Based on content analysis and regression analysis of data from 115 annual reports for 15 Jordanian banks listed in the Amman Stock Exchange for the period 2014 to 2021, the study reveals a consistent increase in the mention of AI-related terms disclosure since 2014. However, the level of AI-related disclosure remains weak for some banks, suggesting that Jordanian banks are still in the early stages of adopting and implementing AI technologies. The results indicate that AI-related keywords disclosure has an influence on banks' financial performance. AI has a positive effect on accounting performance in terms of ROA and ROE and a negative impact on total expenses, which supports the dominant view that AI improves revenue and reduces cost and is also consistent with past literature findings. This study contributes to the growing body of AI literature, specifically the literature on AI voluntary disclosure, in several aspects. First, it provides an objective measure of the uses of AI by formulating an AI disclosure index that captures the status of AI adoption in practice. Second, it provides insights into the relationship between AI disclosure and financial performance. Third, it supports policymakers', international authorities', and supervisory organizations' efforts to address AI disclosure issues and highlights the need for disclosure guidance requirements. Finally, it provides a contribution to banking sector practitioners who are transforming their operations using AI mechanisms and supports the need for more AI disclosure and informed decision making in a manner that aligns with the objectives of financial institutions.