Abstract:
As market attention to artificial intelligence continues to intensify, the extent of corporate AI-washing has deepened progressively, spreading from the technology sector to traditional industries. This phenomenon is detrimental to firms' focus on their core business operations and further exacerbates stock price volatility risk. Given that AI technology is characterized by a high degree of specialization and information opacity, it is worth investigating in depth how institutional investors' on-site visits exert a monitoring and governance function to curb corporate AI-washing. Drawing on multi-source data including corporate annual reports, AI patents, and recruitment information, this study finds that institutional investors' on-site visits effectively suppress corporate AI-washing, and that this effect exhibits persistence across multiple periods. The underlying mechanisms are twofold. First, site visits enhance information transparency. Because such visits are professional in nature and involve on-site interaction, they focus on firms' strategic core and competitive barriers and probe technical details and engineering challenges, thereby transforming otherwise opaque aspects of AI technology into verifiable signals and narrowing the scope for strategic information disclosure. Second, site visits improve internal control quality. Institutional investors' on-site visits are characterized by both stake-related interest and a degree of unpredictability, which provide institutional investors with stronger incentives to monitor corporate behavior, disrupt firms' control over the timing and pacing of information disclosure, and thereby exert sustained external monitoring pressure. Further analysis reveals that when corporate information transparency is relatively low, institutional investors' on-site visits are more effective in fulfilling their information-mining and external monitoring functions, working in tandem with information disclosure regulation to jointly suppress corporate AI-washing. What is more, by curbing corporate AI washing, institutional investors' site visits improve the information efficiency of the capital market. The examination of economic consequences shows that the governance value of institutional investors' site visits and offers implications for strengthening the regulation of information disclosure.
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