Geopolitical Risk and Profit Margin: A Quantitative Study of IBM

Maanav Vinay Kejriwal

International Journal of Finance, Insurance and Risk Management, 2024, vol. 14, issue 3, 22-30

Abstract: Purpose: This research paper explores the impact of geopolitical risk (measured via Geopolitical Risk Index) on IBM's profitability, specifically focusing on profit margins from Fiscal Year (FY) 2009 to FY 2023. Design/Methodology/Approach: Utilizing quantitative methodologies, including correlation and regression analyses, the study identifies a significant negative relationship between the Geopolitical Risk Index (GPRI) and IBM’s profit margins. Findings: The findings reveal that periods of heightened geopolitical tension, such as the Russian invasion of Ukraine and major trade disputes, correspond with substantial declines in profitability. However, variations in the correlation suggest that additional factors, including market strategies and operational efficiencies, also influence profit margins. Practical Implications: This research underscores the importance of geopolitical risk assessment in multinational corporations which is often overlooked and highlights the need for a multifaceted approach to understanding the drivers of financial performance. Originality/Value: The results provide valuable insights for policymakers and business leaders navigating the complexities of a geopolitically volatile environment.

Keywords: Geopolitical Risk Index; IBM; profitability. (search for similar items in EconPapers)
JEL-codes: D81 F52 G32 L25 M16 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:ers:ijfirm:v:14:y:2024:i:3:p:22-30

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