Chapter 10: Application of Artificial Intelligence in Improving Corporate Governance and Sustainability

Purpose: This study aims to explore the transformative role of artificial intelligence (AI) as an internal control mechanism within the framework of corporate governance. The research investigates how AI can facilitate legal compliance, enhance risk management, and contribute to the creation of a more responsive and sustainable business environment.

Design/methodology/approach: Adopting a systems-oriented perspective, this conceptual study analyses the application of AI technologies in addressing governance challenges such as financial misreporting, tax evasion, misuse of investor funds, and false disclosures. The chapter examines key AI-driven constructs – AI realism, AI enthusiasm, and AI radicalism – alongside data visualisation and big data analytics as tools for strengthening corporate accountability and transparency.

Findings: The findings underscore AI's potential to significantly improve corporate oversight and regulatory compliance. By integrating AI into knowledge management systems (KMSs), organisations can develop expert-level decision-making capabilities, resolve regulatory complexities, and address issues such as succession planning through innovations like AI-powered directors. However, the realisation of these benefits depends on the global harmonisation of legal standards and the widespread adoption of AI governance tools.

Practical Implications: This chapter provides actionable insights for corporate leaders, policy makers, and regulators on implementing AI within corporate governance structures. It emphasises the importance of standardised international laws and cross-border cooperation to fully leverage AI's potential for sustainable development.

Originality/value: The study offers a novel contribution by conceptualising AI not merely as a technological tool but as a strategic enabler of soft governance. It highlights the evolving role of AI in fostering ethical, compliant, and future-ready business practices aligned with Industry 4.0.