Executive Characteristics as Moderators: Exploring the Impact of Geopolitical Risk on Capital Structure Decisions

Mona Yaghoubi ()
Additional contact information
Mona Yaghoubi: University of Canterbury, https://www.canterbury.ac.nz

Working Papers in Economics from University of Canterbury, Department of Economics and Finance

Abstract: This study examines the relationship between geopolitical risk and firms’ capital structure decisions, focusing on the moderating effects of executive characteristics. Using US corporation data from 1992 to 2020, we find that firms adopt more conservative capital structure choices in response to higher exposure to geopolitical risk. Furthermore, we investigate how executives’ age and gender influence this relationship. Our findings indicate that firms with a higher proportion of female executives demonstrate heightened sensitivity to geopolitical risk, leading to more risk-averse financial decisions. In contrast, firms with older executives attenuate the adverse impact of geopolitical risk on financial leverage, suggesting a mitigating effect. The robustness of our results is confirmed through alternative measures of capital structure and estimation methods. We also identify risk aversion as a potential channel through which geopolitical risk affects capital structure choices and examine the role of executive characteristics in this channel using a moderated mediation model.

Keywords: Geopolitical risk; capital structure; executives age; executives’ gender and risk-aversion (search for similar items in EconPapers)
JEL-codes: D80 F50 G32 G41 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2023-11-01
New Economics Papers: this item is included in nep-cfn
References: Add references at CitEc
Citations:

Downloads: (external link)
https://repec.canterbury.ac.nz/cbt/econwp/2314.pdf (application/pdf)

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:cbt:econwp:23/14

Access Statistics for this paper

More papers in Working Papers in Economics from University of Canterbury, Department of Economics and Finance Private Bag 4800, Christchurch, New Zealand. Contact information at EDIRC.
Bibliographic data for series maintained by Albert Yee ().