AI-Driven Decision Capability, Green Investment Intensity, and Sustainable Firm Performance: The Moderating Role of Governance Quality

Abstract

The role of artificial intelligence (AI) in project evaluation, capital allocation, and sustainability performance has gained attention, yet the firm-level channel through green investment remains underexplored. This study examines whether AI-driven decision capability increases green investment intensity and whether such investment improves environmental sustainability and financial performance under the moderating role of governance quality. The analysis uses panel data for 750 firms from 2015 to 2024 and applies descriptive statistics, panel regression, mediation and moderation tests, dynamic robustness checks, and machine learning models. The results show that AI-driven decision capability significantly increases green investment intensity. Green investment positively affects environmental sustainability and financial performance and mediates the link between AI capability and firm outcomes. Governance quality strengthens the effect of green investment on both outcomes. The findings indicate that AI creates sustainable value through strategic capital allocation, especially when firms maintain effective governance mechanisms.