OSC analysis highlights increasing mentions and diverging sentiment in AI disclosures

TORONTO - The Ontario Securities Commission (OSC) has released staff research that analyzes the frequency and sentiment of Canadian listed issuers' references to Artificial Intelligence (AI) in their financial disclosures.

OSC staff analyzed the Management Discussion and Analysis (MD&A) filings from S&P/TSX Composite Index issuers over a 10-year period. The exploratory study also provided OSC staff with an opportunity to test new large language models (LLMs) for sentiment analysis.

The exploratory research revealed three key findings:

1. Increased AI Mentions: The OSC observed a substantial rise in the number of issuers mentioning AI in their MD&As, reflecting the growing importance and integration of AI technologies across various sectors.
2. Shift in Tone: The 2024 filing year marks a turning point in the overall tone used by issuers to discuss AI. Previously most issuers that discussed AI had an overall positive sentiment, however along with more issuers mentioning AI, there has been a substantial increase in negative sentiment, indicating a more balanced view of AI's risks and opportunities.
3. Diverging Sentiments: Issuers in the Finance and Information sectors exhibit a distinct divergence in sentiment compared to those in other industries. While Finance and Information sectors maintain a more positive outlook on AI, other industries are increasingly cautious.

"This research underscores the evolving landscape of AI in corporate disclosures. As issuers become more attuned to the potential benefits and risks of AI, we see a more nuanced discussion emerging," said Leslie Byberg, Executive Vice President, Strategic Regulation at the OSC.

This exploratory analysis was conducted by staff in the Thought Leadership division of the OSC.

The mandate of the OSC is to provide protection to investors from unfair, improper or fraudulent practices, to foster fair, efficient and competitive capital markets and confidence in the capital markets, to foster capital formation, and to contribute to the stability of the financial system and the reduction of systemic risk. Investors are urged to check the registration of any persons or company offering an investment opportunity and to review the OSC investor materials available at http://www.osc.ca.

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