Major corporations are now using artificial intelligence to write drafts of their quarterly and annual financial reports, a move that streamlines a complex process but raises new questions about transparency and investor trust. Companies like ON Semiconductor and Hewlett Packard Enterprise are leading the charge, leveraging AI to compile narrative sections and accelerate the time it takes to report earnings to the public and regulators.
This shift represents a significant step in the adoption of AI for critical, public-facing corporate functions. While executives praise the technology's efficiency, experts caution that replacing human analysis with automated text generation could fundamentally change how companies communicate with their shareholders.
Key Takeaways
- Major tech companies are using generative AI to draft sections of their official SEC financial filings.
- The primary benefits cited are significant time and cost savings in the financial reporting cycle.
- Concerns are emerging about the potential for AI to create formulaic, less transparent communication with investors.
- There is currently no specific SEC requirement for companies to disclose their use of AI in preparing financial documents.
The New Automated Scribe in Finance
The task of drafting comprehensive financial reports for the Securities and Exchange Commission (SEC) has long been a meticulous, human-driven process. Now, generative AI is taking on the role of first drafter in the finance departments of several prominent companies.
ON Semiconductor, a major chip component manufacturer, has increasingly integrated AI into its reporting workflow over the past year. According to CFO Thad Trent, the technology has become proficient at writing the Management Discussion and Analysis (MD&A) section of their reports. "Previously, the company would ask AI to write one paragraph in a particular section," Trent explained. "Now, we’re getting to the point of: Write the whole section for me."
Hewlett Packard Enterprise (HPE) is also preparing to use its proprietary large language model to produce a first draft of its financial statements. Marie Myers, the company's Chief Financial Officer, aims to eventually have AI write both the financial and non-financial portions of their SEC filings, with humans serving as final validators.
"You want to pick up everything that’s in your current earnings and make sure it’s all well reflected, and that’s what the AI is good at," Myers said. "It’s much better than humans at doing that."
Redefining Efficiency in Reporting
The primary driver behind this adoption is a dramatic increase in efficiency. By automating the initial drafting and data compilation, finance teams can significantly shorten the reporting cycle. This allows them to analyze data rather than just compile it.
What Are SEC Filings?
Publicly traded companies in the United States are required by the Securities and Exchange Commission (SEC) to file regular financial reports, such as the quarterly 10-Q and the annual 10-K. These documents provide a comprehensive overview of a company's financial health and performance, and investors rely on them to make informed decisions.
At ON Semiconductor, AI's assistance has helped shrink the time between closing the books and reporting results from about ten days to just eight. Trent stated the company has a goal to reduce this to six days within the next year. The technology is not just writing text; it is also helping to track down information for crucial accounting tasks like journal entries for revenue and expense accruals.
This sentiment is echoed across the industry. Goldman Sachs CEO David Solomon commented earlier this year that he believes 95% of an S-1 filing, the registration document for an initial public offering, could be completed by AI in just a few minutes.
The Balance Between Automation and Trust
While the efficiency gains are clear, the growing reliance on AI for financial disclosures introduces potential risks. Experts in accounting and corporate law are watching the trend closely, highlighting the importance of maintaining a human element in communications with investors.
Industry Adoption Rates
An impromptu survey at a Financial Executives International event in April revealed how widespread AI use is becoming. According to the poll:
- 28% of attendees use generative AI to help prepare external reporting.
- 16% said they use it extensively.
- 57% reported not using it at all.
Keren Bar-Hava, head of the accounting department at the Hebrew University Business School, warns that trust between management and investors could erode if disclosures lose their human touch. "If disclosures begin to feel formulaic or emotionally empty, investors may disengage," Bar-Hava said. "The danger is when AI replaces critical thinking and honest managerial voice."
Currently, companies are not specifically required to disclose whether AI assisted in compiling their financial reports, unless its use is considered material to the business. This lack of transparency means investors may not know if they are reading a narrative crafted by a management team or one generated by an algorithm.
The Future of Corporate Disclosures
The role of AI in finance is poised to expand beyond simple drafting. Corporate advisers note a conceptual shift from having humans "in the loop," where they actively supervise AI, to having humans "on the loop," where AI operates autonomously and people only intervene to handle exceptions.
Ash Mehta, a senior director analyst at Gartner, described this as a future state that is still "a little while away from becoming commonplace." However, the groundwork is being laid today. Accounting firms that audit these corporate financials are also increasing their own use of AI, though some experts caution that the technology does not yet have the same depth of knowledge as experienced human auditors.
Looking ahead, some see an opportunity for AI to enhance investor relations. Dilshoda Yergasheva, head of financial services at the enterprise AI startup Writer, suggested that AI could enable companies to create customized financial reports for different types of shareholders. "Imagine you have to do a hundred or a thousand different versions to meet your shareholders where they are," Yergasheva said. "With AI, I can see it being done."
This capability could create a new standard for shareholder communication, but it also underscores the profound changes AI is bringing to the core functions of corporate finance and the relationship between companies and their investors.