 Does geopolitical risk matter for corporate investment? Evidence from emerging countries in AsiaAnh-Tuan Le and Thao Phuong Tran Journal of Multinational Financial Management, 2021, vol. 62, issue C Abstract: This paper examines the effect of geopolitical risk on corporate investment in emerging Asian countries. Using an extensive sample spanning 1995–2018, we find that geopolitical risk is negatively associated with corporate investment. Geopolitical risks in China and Russia have a greater impact on corporate investment, while a less significant influence is found in India and Turkey. Our findings are robust to using alternative measures of geopolitical risk, using alternative proxies of investment, even after controlling for endogeneity concerns by a two-stage least square estimation, a system generalized method of moments regression, and the incremental effect of geopolitical risk. The adverse impact of geopolitical risk on firm investment is more pronounced for firms with a higher degree of investment irreversibility. However, firms with greater cash holdings can better mitigate this negative impact. Overall, this paper shows that geopolitical risk is a crucial macrolevel shock influencing corporate investment. Keywords: Geopolitical risk; Corporate investment; Cash holdings; Investment irreversibility (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:mulfin:v:62:y:2021:i:c:s1042444x2100027x DOI: 10.1016/j.mulfin.2021.100703 Access Statistics for this article Journal of Multinational Financial Management is currently edited by I. Mathur and G. G. Booth More articles in Journal of Multinational Financial Management from Elsevier |
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