The Role of Corporate Governance in Enhancing the Financial Performance of Artificial Intelligence Companies Worldwide

Abstract

Financial performance represents a fundamental benchmark for ensuring long-term business sustainability, particularly within the rapidly expanding, capital-intensive, and innovation-driven global Artificial Intelligence (AI) industry. While competitive pressures and financing decisions are widely acknowledged as determinants of profitability, there remains a notable research gap concerning the interaction between market mechanisms, debt structures, and corporate governance in AI firms that require substantial capital investment. This study is designed to investigate the effects of Product Market Competition (PMC), capital structure, and leverage on financial performance, while simultaneously assessing the moderating role of corporate governance in AI companies worldwide. The research population comprises 13 global AI firms, all of which are included as a census sample. Employing a quantitative approach, the study utilizes secondary data extracted from financial statements covering the period 2020–2024. Analytical techniques involve panel data regression and Moderated Regression Analysis (MRA), conducted with the assistance of Stata 19 software. The empirical findings reveal that both PMC and leverage exert a positive and statistically significant influence on financial performance, whereas capital structure does not demonstrate a significant effect. Furthermore, moderation analysis indicates that corporate governance strengthens the impact of capital structure and leverage on financial outcomes. However, governance does not moderate the relationship between PMC and financial performance, largely due to the strong substitutive role of external market discipline.