AI WASHING AS THE NEW CORPORATE MISREPRESENTATION

Objective: This paper discusses the emerging phenomenon of AI washing, i.e. exaggerating or misleading on corporate artificial intelligence capabilities to sound more technologically advanced than actually possible. Inspired by the past corporate misrepresentation scandals and greenwashing endeavors, this paper explores the notion of AI washing and its implication in undermining consumers’ trust towards corporations, manipulating market behavior, and raising significant ethical and legal considerations in corporate governance. Method: The study delves into the theory behind AI washing, examining its characteristics and looking at how it plays out in different jurisdictions around the world (European Union, United States and Asia-Pacific). By conducting a case study analysis and leveraging empirical insights from recent enforcement actions, such as SEC investigations and securities fraud allegations, the paper elucidates how AI washing engenders dire financial, legal, and reputational risks for corporations. Results: Right Technologies Offer Transformation Potential But Misrepresentation Undermines Market Integrity and Stakeholder Confidence According to New Study Takeaways include the widening regulatory gap between rapid technology growth per one, with only 43% of companies including AI-related risk in SEC filing while many made general claim about AI per another. Novelty: It offers extensive policy and regulatory recommendations, calling for compulsory algorithmic disclosure obligations, standardized auditing frameworks and better measurement regimes, as well as enhanced cross-border enforcement mechanisms led by multilateral institutions like the OECD and IOSCO. They underscore the urgent need for defined law addressing AI washing, transparency in corporate messaging and accountability processes to separate misconstructions from legitimate next-generation development. This research expands corporate governance theory by framing AI washing among larger conversations about corporate social responsibility, ethical technology use and stakeholder trust.