Artificial intelligence, dynamic capabilities, and corporate financial asset allocation

The integration of artificial intelligence (AI) into corporate operations has revolutionized financial decisionmaking processes, yet our understanding of how AI adoption specifically impacts financial asset allocation remains limited. While existing research has explored AI's role in various financial applications, there is a critical gap in empirically examining the relationship between AI adoption and corporate financial asset allocation, particularly in understanding the organizational capabilities that enable firms to effectively leverage AI technologies. This study investigates this relationship using panel data from 25,811 firm-year observations of Chinese A-share listed companies (2008-2022). Through comprehensive regression analyses, we find that AI adoption significantly enhances corporate financial asset allocation efficiency, with this relationship being distinctly moderated by organizational dynamic capabilities. Notably, absorptive capability exhibits the strongest moderating effect, followed by innovative and adaptive capabilities. These findings advance our understanding of AI's role in corporate finance by demonstrating that the success of AI implementation in financial decisionmaking is contingent upon firms' underlying organizational capabilities. The results provide valuable insights for managers and policymakers in developing targeted strategies to enhance the effectiveness of AI adoption in corporate financial management.