Impact of artificial intelligence innovation on debt default risk of construction firms: the moderating role of intellectual capital

Purpose This study aims to examine the impact of artificial intelligence (AI) innovation on debt default risk of construction firms. It also explores the moderating role of intellectual capital. Design/methodology/approach This study analyzes 846 firm-year observations from Chinese listed construction firms between 2007 and 2022. A two-way fixed-effects model is used to test the proposed hypotheses. Findings The findings of this study are as follows: (1) AI innovation significantly reduces debt default risk of construction firms. (2) The three dimensions of intellectual capital (i.e. human capital, structural capital, and relational capital) strengthen the mitigating effect of AI innovation on debt default risk, with human capital playing the most significant role. (3) AI innovation mitigates debt default risk through internal operational optimization and external relationship coordination. Practical implications This study offers empirical evidence on the negative AI innovation–debt default risk relationship of construction firms. It also provides actionable guidance for construction managers to improve the effectiveness of AI innovation by fostering the development of intellectual capital. Originality/value By providing empirical evidence for the mitigating effect of AI innovation on debt default risk of construction firms, this study fills a critical gap in the literature of AI innovation and construction risk management. It also provides academics and practitioners with novel insights for synergistically leveraging AI innovation and intellectual capital to manage debt default risk in the construction industry.