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All Journal Owner : Riset dan Jurnal Akuntansi
Windi Riris Lubis
Faculty of Business and Management, Batam International University, Indonesia
Economics, Econometrics & Finance

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ESG and Financial Risk: Does AI Innovation Strengthen the Relationship? Isnaini Nuzula Agustin; Windi Riris Lubis; Badriatul Mawadah
Owner : Riset dan Jurnal Akuntansi Vol. 10 No. 4 (2026): Artikel riset Oktober 2026
Publisher : Politeknik Ganesha Medan

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.33395/owner.v10i4.3658

Abstract

This study aims to examine the impact of Environmental, Social, and Governance (ESG) performance on a firm’s financial risk and to explore the moderating role of Artificial intelligence (AI) innovation. This research uses a quantitative approach with secondary data from Indonesia companies listed on Indonesia Stock Exchange for the period 2018 – 2024, resulting in 340 observations. The firm financial risk is measured using Altman Z-Score and Zmijewski X-Score, while the analysis is conducted using panel regression with fixed effects. The results show that ESG performance does not have a significant effect on financial stability as measured by Z-Score, suggesting that the financial benefits of implementing ESG might not be immediately visible in the short-term. However, ESG significantly reduces financial distress risk as measured by the X-Score, indicating that stronger ESG practices increase financial resilience. AI innovation contributes to improving financial outcomes, but does not consistently strengthen them. Overall, this study concludes that ESG performance supported by AI innovation has the potential to lower financial distress. This study contributes to the growing sustainability finance literature by providing empirical evidence from an emerging market on how ESG performance and AI innovation jointly influence firm financial risk.
Co-Authors Badriatul Mawadah Isnaini Nuzula Agustin