AI technology adoption and corporate financial misconduct

Purpose As artificial intelligence (AI) becomes increasingly integrated into business practices, understanding its impact on corporate financial integrity has become crucial as well. Therefore, this research empirically aims to investigate the impact of AI adoption on corporate financial misconduct (FM). Design/methodology/approach This study utilizes a novel composite weighted index to measure corporate AI adoption. The dataset comprises China’s A-share listed companies from 2010 to 2022 to examine how corporate AI adoption affects FM. Findings Research results reveal a significant negative effect of corporate AI adoption on FM, suggesting that embracing AI-related technologies play a vital role in mitigating corporate unethical financial practices. The mechanism analysis indicates that AI adoption helps reduce managerial myopia and enhances internal controls, thereby curbing FM. Furthermore, heterogeneity results show that the negative influence of AI adoption on FM is markedly pronounced in firms with technically skilled CEOs, operating in the technology sector, and in regions with low marketization levels. Lastly, additional analysis demonstrates that the influence of AI adoption on FM displays a nonlinear (U-shaped) relationship, suggesting that moderate AI adoption reduces unethical financial practices, whereas high AI adoption results in a contrary effect. Originality/value This research underscores the potential of AI adoption to advance ethical corporate behavior and strengthen financial governance.