Conditional Gains: When AI Investment Enhances Firm Efficiency

The rapid adoption of artificial intelligence (AI) has raised questions about its effect on firm performance. Using a labor‐based measure of AI investment, the baseline results show no direct association between AI investment and firm efficiency. The heterogeneity analysis indicates that efficiency gains materialize primarily when firms pair AI with capable managers, face stronger competitive pressure, have more stable institutional investor ownership, and are able to secure long‐term debt.