Can Artificial Intelligence Adoption Mitigate the Green Innovation Bubble in Enterprises? Empirical Evidence from Chinese A-Share Listed Firms

Artificial intelligence (AI) serves as a vanguard technology in the modern epoch, playing an essential part in fostering ecological and sustainable progress. By utilizing longitudinal data from Chinese A-share corporations between 2014 and 2023, this inquiry empirically explores how AI integration affects the green innovation bubbles of firms along with the governing mechanisms. Our evidence reveals that AI adoption exerts a significant inhibitory effect on such bubbles; for every one-standard-deviation uptick in AI utilization, there is a corresponding decline in green innovation bubbles of approximately 0.108 standard deviations. This finding remains robust across multiple robustness checks. Mechanism analysis shows that AI mitigates green innovation bubbles by enhancing green total factor productivity and reducing excessive managerial expenses. Furthermore, the expansion of the digital financial landscape and the exploitation of information assets bolster the repressive influence of artificial intelligence. Analytical tests for heterogeneity demonstrate that this influence is more significant for state-controlled corporations, businesses operating in non-polluting industries, and those headquartered within the eastern regions of China. Overall, the findings provide robust empirical evidence that AI adoption contributes to the governance of inefficient and inflated green innovation activities, while the causal interpretation of the results should remain cautious given the observational nature of the data and the limitations of the identification strategy.