Academic Events

Topic:

Time&Date:

9:00 am - 10:30 am, March 14, 2025 (Friday)

Venue

Online ZOOM Meeting

Speaker:

Jung Ho Choi

Stanford University

This paper studies the usage of AI in financial reporting. We partner with a technology startup that provides AI tools to accountants. We combine field data from 74 companies with hundreds of thousands of transactions and survey data from 277 accountants in the US to understand how this growing technology is incorporated into accounting processes, especially in transaction analysis, at both the task and transaction level. We provide the following early evidence: 1) 38% of survey participants report having fully or partially integrated Generative AI into their workflows, including financial reporting tasks. 2) Generative AI usage is associated with a 66% increase in the number of clients supported in the same week, with accountants reallocating approximately 10% of their time from routine tasks to business communication and quality assurance. 3) AI adoption is associated with a 4-day reduction in the time required for monthly financial reporting. 4) Experienced accountants tend to use these tools more frequently but remain cautious about relying on them for complex tasks (e.g., accruals). 5) The LLM-powered AI software generates high-confidence scores for validated transactions, efficiently auto-categorizes accounts without specific rules, and integrates data from multiple sources using machine learning.

Keywords: Generative AI, Financial Reporting, Accountant, Technology Adoption, Large Language Model, Human + AI

JEL Classification: O33, M41, M54, C45

Biography:

Jung Ho Choi completed his PhD at the University of Chicago Booth School of Business in 2017. In 2012, he earned a master’s degree in statistics from Columbia University. He worked as a financial adviser at PricewaterhouseCoopers in South Korea for five years after he graduated from Korea University with a bachelor’s degree in economics in 2005. His research interests are in the real effects of accounting, labor economics, personnel economics, productivity, and technology. Jung Ho Choi investigates how informational frictions and innovations have an influence on the processes and outcomes of the labor market and how these factors interact with each other. Using corporate disclosure as a major research setting, he studies how informational frictions, especially about employers, can interact with the labor market in three different dimensions: 1) Corporate disclosure (e.g., accounting fraud) has an impact on corporate decisions, which, in turn, affect the labor market (e.g., wage and job turnover); 2) Corporate disclosure shapes the labor market as employees, as an important stakeholder, consumes corporate disclosure (e.g., earnings announcements) for decision making (e.g., job search); 3) Employees, as an input in the (information) production function, have an impact on corporate disclosure. Additionally, he studies how corporate disclosure (e.g., cost structure disclosure) has an impact on individual and aggregate productivity and innovation (e.g., cost innovation and productivity dispersion).