Persistence of past: Impact of historical institutions on corporate risk taking
Mehul Raithatha and
Finance Research Letters, 2022, vol. 45, issue C
Using the context of institutional transitions in the emerging economy context of India, we examine the influence of a firm's historical economic policies on its corporate risk-taking. We propose that protectionist and constraining economic policies of the socialist regime inscribe ‘risk-avoidance’ routines on incumbent firms, which continue to persist. Utilizing the data of the Indian economic environment (1956–1991) and analyzing a large sample of Indian firms during 1994–2007, we hypothesize and find the support that level of protectionist imprinting negatively impacts corporate risk-taking in the post-liberalization era. This effect is weakened by the moderating impact of the business group affiliation.
Keywords: Corporate risk-taking; Emerging economies; Institutional transitions; Protectionist imprinting (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:45:y:2022:i:c:s1544612321002658
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