IMPACT OF ARTIFICIAL INTELLIGENCE ON CORPORATE GOVERNANCE PRACTICES AND STAKEHOLDER REACTIONS: AN EMPIRICAL STUDY

Abstract

Artificial Intelligence (AI) has evolved from a technological support mechanism into a strategic organizational capability capable of influencing managerial decision-making, internal control, risk management, financial reporting, compliance, board effectiveness, and stakeholder engagement. This transformation has created a new intersection between artificial intelligence and corporate governance. The present study examines how AI adoption affects corporate governance practices and how shareholders, employees, customers, regulators, suppliers, creditors, and other stakeholders react to AI-enabled corporate decision-making. The study is particularly relevant because AI can simultaneously strengthen governance through improved information processing, continuous monitoring, anomaly detection and reduction of information asymmetry while creating new risks involving algorithmic bias, opacity, privacy, cyber security, accountability and excessive dependence on automated recommendations.

            The study adopts a mixed conceptual-empirical framework based on recent scholarly evidence and proposes an empirical research design using firm-level AI adoption indicators, corporate governance measures and stakeholder-reaction variables. Recent evidence from Chinese listed firms indicates that AI adoption is associated with improved governance, with internal control, agency costs and information asymmetry emerging as important mechanisms. Other recent studies indicate that board structure influences the ability of firms to attract AI-skilled employees and that responsible AI governance requires explicit board-level oversight.