Geopolitical risk and investment-cash flow sensitivity: does the age of the CEO matter? Empirical evidence from emerging economy

Gaurav Gupta

Applied Economics, 2025, vol. 57, issue 19, 2426-2440

Abstract: This study examines the impact of geopolitical risk on investment–cash flow sensitivity. Further, this study also investigates the moderating role of the chief executive officer’s age on the relationship between geopolitical risk and investment–cash flow sensitivity for Indian firms. Using the system-generalized method of moments technique, this study uses two-way interaction and reveals that geopolitical risk increases investment–cash flow sensitivity. Further, this study also uses three-way interaction and discloses that the chief executive officer’s age moderates the effect of geopolitical risk on investment–cash flow sensitivity. Interestingly, this study finds that older and middle-aged (younger) chief executive officers diminish (increase) the impact of geopolitical risk on investment–cash flow sensitivity. This study also shows that the effect of geopolitical risk remains consistent while incorporating alternate measurements of the dependent and independent variables.

Date: 2025
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DOI: 10.1080/00036846.2024.2324850

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