Exploring the relationship between human-centric AI and firm idiosyncratic risks

Computer Science > Artificial Intelligence [Submitted on 23 Jun 2026] Exploring the relationship between human-centric AI and firm idiosyncratic risks Zhen-Yuan Ralph Liu (CUMT), Yu-Ting Wang (NFU), Jia-Jia Yan, Shivam Gupta (NEOMA), Mihalis Giannakis Despite the extensive discussions of human-centric AI (HCAI) in Industry 5.0, its effects on firms' idiosyncratic risks (IR) remains underexplored. This is an imperative issue for firms navigate financial risks during the current technological revolution, as IR reflects investor reactions to corporate heterogeneous AI strategies and implementations by isolating firm-level stock volatility from systematic factors. Integrating situated AI theory with social-technical systems theory, we conceptualise HCAI as a situated AI strategy that reduces AI-related ethical risks and fosters AI-Human synergies in firms' business operations, ultimately reducing IR by aligning with stakeholders' diverse expectations. Moreover, socio-technical factors, namely digitalisation, operational efficiency, executive shareholding, and CEOs with IT background, may moderate the HCAI-IR relationship. Using a multi-source panel dataset of Chinese listed firms from 2015 to 2023, we find that HCAI is associated with lower firm IR. Furthermore, digitalisation and executive shareholding strengthen this risk-reducing effect, whereas operational efficiency and CEOs with IT background surprisingly attenuate it. Our findings offer theoretical contributions and practical insights for both ethical AI governance and firm financial risk management in the AI era. Comments: Information Systems Frontiers, 2026 Subjects: Artificial Intelligence (cs.AI) Cite as: arXiv:2606.24224 [cs.AI]   (or arXiv:2606.24224v1 [cs.AI] for this version)   https://doi.org/10.48550/arXiv.2606.24224 Focus to learn more Submission history From: Mihalis Giannakis [view email] [via CCSD proxy] [v1] Tue, 23 Jun 2026 07:10:59 UTC (1,322 KB) Access Paper: view license Current browse context: cs.AI < prev   |   next > new | recent | 2026-06 Change to browse by: cs References & Citations NASA ADS Google Scholar Semantic Scholar Export BibTeX Citation Bookmark Bibliographic Tools Bibliographic and Citation Tools Bibliographic Explorer Toggle Bibliographic Explorer (What is the Explorer?) Connected Papers Toggle Connected Papers (What is Connected Papers?) Litmaps Toggle Litmaps (What is Litmaps?) scite.ai Toggle scite Smart Citations (What are Smart Citations?) Code, Data, Media Demos Related Papers About arXivLabs Which authors of this paper are endorsers? | Disable MathJax (What is MathJax?)