Is AI the new corporate monitor? Evidence from excessive on-the-job consumption

Abstract

Excessive on-the-job consumption (EOJC) represents a manifestation of corporate agency problems that ultimately undermines firm value. As artificial intelligence (AI) applications permeate various aspects of corporate operations, this study examines AI’s impact on EOJC. Analyzing 2788 Chinese manufacturing firms (2007–2022), we find AI implementation significantly reduces EOJC by dissolving hierarchical information barriers to enhance governance quality and curbing managerial discretion through algorithm-driven decision protocols. Further analysis reveals that AI exerts stronger governance effects in highly competitive industries by augmenting existing market discipline mechanisms, while synergizing with information-transparent firms to amplify monitoring efficacy. These findings reveal AI’s potential for institutional transformation in corporate governance systems.