DOES HISTORICAL NATURAL DISASTER AFFECT CORPORATE RISK-TAKING NOWADAYS? — EVIDENCE FROM YELLOW RIVER FLOODING IN CHINA

Weihua Yu, Jinfei Niu and Yu Zhang
Additional contact information
Weihua Yu: Jinhe Center for Economic Research, Xi’an Jiaotong University, Xi’an, Shaanxi, P. R. China
Jinfei Niu: Jinhe Center for Economic Research, Xi’an Jiaotong University, Xi’an, Shaanxi, P. R. China
Yu Zhang: ��School of Economics, Jiaxing University, Jiaxing, Zhejiang, P. R. China

The Singapore Economic Review (SER), 2024, vol. 69, issue 08, 2391-2418

Abstract: Frequent natural disasters have had an important impact on social development and human behavior. Based on quasi-natural experiments in the flooding area of Yellow River, this study investigates the impact of the historical Yellow River flooding on the risk-taking of modern enterprises by using Regression Discontinuity design. Our study finds that those enterprises located in the flooding area of Yellow River have significantly lower risk-taking capability than those not located in the flooding area of Yellow River. Our claim remains unchanged when we use a series of robustness checks and rule out some competing explanations. This negative influence can be attributed to three mechanisms, namely trust, religious belief and uncertainty avoidance. And the negative effects are subject to heterogeneity stemming from variations in an enterprise’s ownership structure and scale. More importantly, the negative impact of the Yellow River flooding on the risk-taking of enterprises can be alleviated in areas with a higher level of formal institution.

Keywords: Natural disaster; Yellow River flooding; corporate risk-taking (search for similar items in EconPapers)
JEL-codes: D21 N55 Q54 (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S0217590824500358
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:serxxx:v:69:y:2024:i:08:n:s0217590824500358

Ordering information: This journal article can be ordered from

DOI: 10.1142/S0217590824500358

Access Statistics for this article

The Singapore Economic Review (SER) is currently edited by Euston Quah

More articles in The Singapore Economic Review (SER) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().