Vol. 5 No. 1 (2025): Issue 5
Articles

Investigating the impact AI on Corporate financial and operating flexibility of Retail Enterprises in China

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  • Chi Li ,
  • Yingda Tang,
  • Kaixian Xu
Chi Li
. Louis Vuitton China Ltd. Shanghai, 200000, China; School of Business and Tourism Management, Yunnan University, Yunnan, 650500, China
Yingda Tang
Anderson School of Management, University of California, Los Angeles, 90095, USA
Kaixian Xu
Risk & Quant Analytics, BlackRock, 50 Hudson Yards, New York, 10001, USA

Published 2025-02-10

Keywords

  • Artificial Intelligence,
  • Corporate Operating flexibility,
  • Corporate Financial flexibility,
  • Retail enterprises

How to Cite

Li , C., Tang, Y., & Xu, K. (2025). Investigating the impact AI on Corporate financial and operating flexibility of Retail Enterprises in China. Economic and Financial Research Letters, 5(1). Retrieved from https://ojs.mri-pub.com/index.php/EFRL/article/view/81

Abstract

Using panel data of 373 retail firms listed on Shenzhen and Shanghai Stock Exchange from 2011 to 2022, this study examines the transformative impact of artificial intelligence on the operating and financial flexibility of retail enterprises of China. We employ two-way fixed effects regression model to demonstrate how AI influences corporate operating and financial flexibility. The findings of this study show that AI positively influence corporate operating and financial flexibility, however, the influence is more pronounced and greater on operating flexibility of retail firms. The heterogeneity analysis results show that retail firms with high innovation capabilities and those in developed regions benefit most from AI adoption, optimizing their adaptability and stability via improving operating and financial flexibility. Moreover, AI fosters operating flexibility of small-sized retail enterprises while enhances financial flexibility of large-sized retail enterprises. These findings highlight the crucial role of AI to navigate uncertainties and driver resilience in the evolving economic landscape. Policymakers are suggested to foster AI infrastructure, make innovation-driven policies, and promote digital inclusion to ensure sustainable growth and equitable benefits for China’s retail industry.

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