Research Article

Artificial Intelligence in Corporate Financial Strategy: Transforming Long-Term Investment and Capital Budgeting Decisions

Authors

  • Ashutosh Roy MBA in Business Analytics, Gannon University, USA
  • Jannat Ara Master’s in Public Administration, Gannon University, USA
  • Sridhar Ghodke MBA in Business Analytics, Gannon University, USA
  • Jasmin Akter MBA in Business Analytics, Gannon University, USA

Abstract

Artificial Intelligence (AI) is increasingly transforming the landscape of corporate financial strategy, particularly in the domain of long-term investment and capital budgeting. Traditional evaluation methods—such as Net Present Value (NPV), Internal Rate of Return (IRR), scenario analysis, and real options valuation—are essential tools for strategic decision-making but are constrained by rigid assumptions, historical data limitations, and the inability to adapt quickly to uncertainty. AI-powered models, by contrast, offer dynamic, data-driven approaches that enhance forecasting accuracy, risk assessment, and strategic flexibility. Through machine learning, natural language processing, and predictive analytics, corporations can analyze vast amounts of financial and non-financial data, identify hidden patterns, and generate real-time insights to guide investment decisions. This paper examines how AI augments the capital budgeting process by refining cash flow estimation, enabling advanced scenario simulations, and integrating external factors such as macroeconomic volatility, market sentiment, and ESG considerations into corporate financial planning. The study further investigates the role of AI in real options valuation, where adaptive models provide managers with enhanced flexibility in responding to evolving market conditions, technological disruptions, and competitive pressures. In addition, ethical and governance implications are discussed, particularly regarding the transparency and interpretability of AI-driven financial decisions. By bridging traditional corporate finance theories with advanced AI applications, this research highlights the potential for firms to optimize capital allocation, reduce uncertainty in investment planning, and maximize long-term shareholder value. Ultimately, the study argues that AI is not merely a supportive tool but a transformative force capable of redefining corporate financial strategy and positioning organizations for sustainable growth in increasingly complex global markets.

Article information

Journal

Journal of Economics, Finance and Accounting Studies

Volume (Issue)

7 (5)

Pages

50-59

Published

2025-09-21

How to Cite

Ashutosh Roy, Jannat Ara, Sridhar Ghodke, & Jasmin Akter. (2025). Artificial Intelligence in Corporate Financial Strategy: Transforming Long-Term Investment and Capital Budgeting Decisions. Journal of Economics, Finance and Accounting Studies , 7(5), 50-59. https://doi.org/10.32996/jefas.2025.7.5.6

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Keywords:

Corporate Finance, Capital Budgeting, Net Present Value (NPV), Internal Rate of Return (IRR), Scenario Analysis, Predictive Analytics, Investment Decision-Making, Risk Management, Financial Forecasting, ESG Integration