Role of substantive and rhetorical signals in the market reaction to announcements on AI adoption: A configurational study

How do shareholders respond to technologies hyped in general discourse, e.g. artificial intelligence (AI), if a common understanding is lacking and the technologies are still evolving? Do they respond primarily to substantive signals in technology announcements, such as AI capabilities, or do rhetorical signals also play a significant role? Adopting signalling theory as a theoretical lens, we conceptualise announcements of AI capabilities as substantive signals and linguistic elements in the announcements pertaining to organisational time horizon and risk- reward considerations as rhetorical signals. Departing from the typical focus on bijective relationships, we consider holistic, complex configurations of interdependent factors using the qualitative comparative analysis (QCA) methodology. Notably, announcements pertaining to AI capabilities are not necessarily associated with positive market reactions; in fact, when all three types of AI are included in announcements without explicit consideration of risks, shareholders react negatively. We find that shareholder response is based on joint evaluation of substantive and rhetorical signals, and that these signals interact in a complex way to produce positive and negative market reactions. These findings motivate several propositions for market reactions to IT announcements, providing implications for both theory and practice.