Does Artificial Intelligence Moderate the Effect of Carbon Risk on Firm Financial Risk in Indonesia

  • Isnaini Nuzula Agustin Universitas Internasional Batam, Indonesia
  • Jolin Universitas Internasional Batam, Indonesia
  • Badriatul Mawadah Universitas Internasional Batam, Indonesia
DOI: https://doi.org/10.54783/ijsoc.v8i4.1787
Keywords: Artificial Intelligence, Carbon Risk, Firm Financial Risk, Zmijewski X-Score

Abstract

This study aims to analyze the effect of carbon risk on firm financial risk and examine the moderating role of Artificial Intelligence Innovation. The research focuses on carbon-intensive companies listed on the Indonesia Stock Exchange (IDX) using a quantitative research approach. Secondary data drawn from financial statements, annual reports, and sustainability reports over the period 2018-2024 (382 observations). The data were analyzed using panel data regression and Moderation Regression Analysis (MRA). The research findings indicate that carbon risk has a positive and significant effect on firm financial risk driven by higher compliance costs, regulatory pressure, and reputational risks faced by companies with high carbon emissions. Additionally, AI innovations weakens this link by improving efficiency, risk analysis, and decision-making. The implications of this study indicate that firms should make greater use of Artificial Intelligence in their risk management strategies to strengthen financial resilience and promote sustainability. The novelty of this study lies in its analysis of the moderating effect of Artificial Intelligence on the relationship between carbon risk and firm financial risk, particularly in developing countries such as Indonesia.

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Published
2026-10-23
How to Cite
Isnaini Nuzula Agustin, Jolin, & Badriatul Mawadah. (2026). Does Artificial Intelligence Moderate the Effect of Carbon Risk on Firm Financial Risk in Indonesia. International Journal of Science and Society, 8(4), 421-436. https://doi.org/10.54783/ijsoc.v8i4.1787
Issue
Vol 8 No 4 (2026): International Journal of Science and Society (IJSOC)
Section
Articles

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