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Artificial intelligence innovation and financial information quality: Evidence from firm patent data

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  • Li, Zheng
  • Li, Haitong
  • Dai, Pengyi

Abstract

The rapid development of artificial intelligence (AI) is reshaping corporate practices, making its unintended implications for firms’ governance a topic worth exploring. This study examines the association between AI innovation and financial information quality from a governance perspective. Based on patent-level textual data, we construct an AI keyword dictionary using machine learning and measure firm-level AI innovation using text analysis method. Our empirical results indicate that AI innovation is positively associated with firm’s financial information quality. The mechanisms include improvements in internal control and increased external market attention. In cross-sectional analyses, our main finding is more pronounced in firms with poor corporate governance, high-tech certifications, and strong government digital initiatives. We further find the dual role of AI innovation in enhancing governance by reducing two types of agency costs. Our study provides new insights into the role of AI innovation in improving corporate governance and financial information quality.

Suggested Citation

  • Li, Zheng & Li, Haitong & Dai, Pengyi, 2026. "Artificial intelligence innovation and financial information quality: Evidence from firm patent data," Research in International Business and Finance, Elsevier, vol. 82(C).
    • Handle: RePEc:eee:riibaf:v:82:y:2026:i:c:s0275531925004817
    DOI: 10.1016/j.ribaf.2025.103225
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