The Role of Generative AI in Enhancing Corporate Governance Quality and Financial Performance: Evidence from Emerging Economies

Abstract Generative Artificial Intelligence (GAI) functions as a revolutionary technology, disrupting digital economies as well as governance institutions. Our study examines whether GAI improves corporate governance quality and financial performance in emerging countries. Primary data were collected from nine emerging economies for the year 2021 and 2023 to conduct long panel data, and analysis was performed by means of Partial Least Squares Structural Equation Modeling (PLS-SEM) technique. Findings indicated a statistically significant direct positively effect of GAI adoption on governance quality (β = 0.46), and governance quality in turn on financial performance (β = 0.41). The results of mediation indicate that corporate governance mediates role of GAI on this relationship partially (VAF = 35.8%). Suggested by these findings, GAI contributes not only to operational efficiency, but also to institutional moorings—as transparency and regulatory compliance are bolstered. The paper presents new empirical findings on the relationship among technological innovation, institutional quality, and economic development, which can be informative to both policy makers and scholars who concern digital transformation and governance reform.