Generative AI and Investor Processing of Financial Media

We examine how AI-generated summaries in financial news influence investor information processing. Exploiting The Wall Street Journal’s rollout of AI summaries, we find that articles featuring these summaries elicit stronger immediate market reactions, including higher trading volume and amplified price responses. Additional analyses show that the accentuated trading are associated with the contents summarized by AI but not those not summarized by AI. We investigate the underlying mechanism using a controlled experiment. Contrary to the concern that AI summaries encourage skimming, we find they increase both perceived confidence and objective recall of the full article text. These findings suggest that AI summaries do not substitute for reading but rather serve as interpretive cues, enhancing overall comprehension while directing investor attention toward highlighted elements. Cross-sectional analyses show that the effect of AI-generated summaries are concentrated in settings with greater information frictions. Finally, articles with AI-generated summaries are associated with significantly greater subsequent information search by both retail and institutional investors. Our study documents how the integration of AI in financial media reshapes the consumption of firm news.