How AI affects the future relationship between corporate governance and financial markets: a note on impact capitalism

• Published in: Managerial finance Vol. 48; no. 8; pp. 1240 - 1249
• Main Authors: McBride, Russ, Dastan, Alireza, Mehrabinia, Poorya
• Format: Journal Article
• Language: English
• Published: Patrington Emerald Publishing Limited 07.07.2022; Emerald Group Publishing Limited
• Subjects: Accounting; Accounting systems; Artificial intelligence; Asset pricing; Bias; Corporate governance; False information; Institutional investments; Ratings & rankings; Securities markets; Social networks; Social responsibility; Startups; Stockholders; Sustainability; Sustainability management; ESG; Corporate social responsibility; Socially responsible investment; Corporate governance; Artificial intelligence; SDG
• ISSN: 0307-4358; 1758-7743
• DOI: 10.1108/MF-12-2021-0586

PurposeThe authors discuss how artificial intelligence (AI) can facilitate and incentivize reform in corporate social responsibility (CSR), i.e. governance with regard to pledge for socially responsible investments (SRIs).Design/methodology/approachThe current essay examines the impacts of AI systems on the dynamics between corporate governance and financial markets in terms of promoting sustainability. Based on a qualitative review of over 100 pieces of literature, we offer an outlook into the mentioned dynamics through the lens of complex systems. Legal and ethical provisions for safe and robust AI systems are briefly discussed and integrated.FindingsIn a closed system, there is a reinforcing feedback loop between SRI and CSR. AI is a moderator to increase SRI and a mediator to incentivize CSR. If the legal and ethical provisions are involved in the AI systems, they could act as catalyst for corporate governance reform towards sustainability.Research limitations/implicationsThe findings are based on a solely qualitative assessment of the prior literature in corporate governance, corporate law, AI and data governance, asset pricing, and asset allocation. The scopes and specifics of the relationship are yet to be found through quanatitative or quantitative/qualitative hybrid methods.Originality/valueThis is to certify that to the best of our knowledge, the content of this thesis is our own work. This paper has not been submitted for any degree or other purposes. The authors certify that the intellectual content of this research is the product of the authors’ own work and that all the assistance received in preparing this paper and sources have been acknowledged. Russ McBride Alireza Dastan Poorya Mehrabinia