With AI penetrating many facets of our lives these days, it’s inevitable that it will influence the way you work. It might be through proprietary closed-loop AI services – or it might be through open source AI platforms.
Here are four ways that AI might impact how you draft disclosure:
- Doing diligence about what your peers are disclosing
- Doing diligence about what might be your company’s biggest risks and known trends and uncertainties
- Doing diligence about how investors are reading your disclosures
- Doing diligence about how AI agents for investors are reading your disclosures
Let’s break these down in greater detail:
- Doing diligence about what your peers are disclosing – Most in-house folks take the time to pull the ’34 Act disclosures for the industry peers that their companies have, as well as the disclosures for companies known to be the leaders in disclosure.
Conducting those straight reads take a lot of time. With AI, one can – or will be able to soon – run comparisons among groups of companies about particular disclosure topics. This will allow you to better drill down and comprehend what the disclosure trends are for narrow topics in real-time rather than wait until the proxy season is over and review the analyses that some folks put together months after it would be useful to you. - Doing diligence about what might be your company’s biggest risks and known trends and uncertainties – As I’ve blogged before, it makes sense to regularly ask AI what the biggest risks are that your company faces to see if it gives you ideas for new – or modified – risk factors. Perhaps the AI will find things that your diligence didn’t find.
The same kind of research can be done for your company’s “known trend and uncertainties” that makes it way into your MD&A. It’s possible that AI picks up on things that your own people aren’t fully aware of – or things that didn’t bubble up to you as the disclosure drafter. I believe that these sort of searches will eventually be standard practice as part of your disclosure controls. - Doing diligence about how investors are reading your disclosures – This one is a bit of a long shot but I wonder if AI eventually will be able to give us better data about how investors typically read corporate disclosures. Right now, we are sort of shooting in the dark – relying on anecdotal comments – to uncover how investors read SEC filings.
Unanswered questions include: Which part of the filings are read the most? The least? Which parts are comprehended the best? How many investors actually read the entire thing? Which filings are the most popular? - Doing diligence about how AI agents for investors are reading your disclosures – Recently, I blogged about how investors increasingly will rely on AI agents to help them with the investor and voting choices. If that is indeed true, it behooves the disclosure drafter to understand how AI agents read disclosures – because then disclosure it can be drafted in a way to best help these AI agents understand the messages that the company is trying to convey.
