Do geopolitical risks increase corporate risk-taking?—Based on the perspective of diversification expansion

IF 4.6 3区管理学 Q1 BUSINESS

Corporate Governance-An International Review Pub Date : 2023-07-02 DOI:10.1111/corg.12538

Li Li, Xiang Cheng

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引用次数: 0

Abstract

Research Question/Issue

Does geopolitical risk increase a firm's risk-taking, and will diversification expansion smooth out or exacerbate this effect?

Research Findings/Insights

Based on microdata of Chinese A-share listed companies, we find that (1) geopolitical risk significantly increases corporate risk-taking at both micro and macro levels; (2) horizontal diversification can significantly smooth out the impact of geopolitical risk on a firm's risk-taking, while vertical diversification will exacerbate the effect; (3) geopolitical risk and diversification do not significantly impact all firms, and their effect are limited to non-state-owned enterprises and firms in manufacturing industries.

Theoretical/Academic Implications

First, compared with the previous studies, this paper identifies the geopolitical risk faced by each sample firm separately, thus providing a more accurate analysis of the impact of the specific geopolitical risk faced by the firm on its risk-taking. Second, we expand the connotation of diversification and analyze its moderating effect on corporate risk-taking from the perspective of horizontal and vertical diversification. Third, considering that the degree of political affiliation and capital intensity may affect a firm's sensitivity to geopolitical risk, this paper examines the relationship between geopolitical risk, diversification, and a firm's risk-taking regarding property rights and industry type.

Practitioner/Policy Implications

On the one hand, export-oriented firms should pay close attention to the geopolitical risk situation in exporting countries to reduce the adverse impact of sudden geopolitical risks. On the other hand, diversification expansion is a double-edged sword for firms. Although vertical diversification increases the risk-taking of a firm, it also increases its specialization. Therefore, it is necessary to make a comprehensive judgment on whether and what kind of diversification an enterprise should undertake according to its business development status.

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地缘政治风险会增加企业的风险承担吗?基于多元化扩张的视角

研究问题地缘政治风险是否会增加企业的风险承担，多元化扩张会平滑还是加剧这种效应？研究结果/启示基于中国 A 股上市公司的微观数据，我们发现：（1）地缘政治风险在微观和宏观层面上都会显著增加企业的风险承担；（2）横向多元化能够显著平滑地缘政治风险对企业风险承担的影响，而纵向多元化则会加剧这种影响；（3）地缘政治风险和多元化并不会对所有企业产生显著影响，其影响仅限于非国有企业和制造业企业。理论/学术启示第一，与以往研究相比，本文分别识别了各样本企业面临的地缘政治风险，从而更准确地分析了企业面临的具体地缘政治风险对其风险承担的影响。第二，拓展多元化的内涵，从横向多元化和纵向多元化的角度分析多元化对企业风险承担的调节作用。第三，考虑到政治关联度和资本密集度可能会影响企业对地缘政治风险的敏感性，本文研究了地缘政治风险、多元化与企业在产权和行业类型方面的风险承担之间的关系。实践/政策启示一方面，出口导向型企业应密切关注出口国的地缘政治风险状况，以降低突发性地缘政治风险的不利影响。另一方面，多元化扩张对企业来说是一把双刃剑。虽然纵向多元化增加了企业的风险承担能力，但同时也增加了企业的专业化程度。因此，要根据企业的经营发展状况，综合判断企业是否应该进行多元化经营以及进行何种多元化经营。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Corporate Governance-An International Review Multiple-

CiteScore

7.00

自引率

11.30%

发文量

期刊介绍： The mission of Corporate Governance: An International Review is to publish cutting-edge international business research on the phenomena of comparative corporate governance throughout the global economy. Our ultimate goal is a rigorous and relevant global theory of corporate governance. We define corporate governance broadly as the exercise of power over corporate entities so as to increase the value provided to the organization"s various stakeholders, as well as making those stakeholders accountable for acting responsibly with regard to the protection, generation, and distribution of wealth invested in the firm. Because of this broad conceptualization, a wide variety of academic disciplines can contribute to our understanding.