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Geopolitical risk and corporate innovation: Evidence from risk preference and risk-taking capacity perspectives

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  • Wang, Xueting
  • Wang, Man

Abstract

This paper investigates how geopolitical risk affects corporate innovation from the perspectives of corporate risk preference and risk-taking capacity. We document a significant positive impact of geopolitical risk on corporate innovation and find that corporate risk preference and risk-taking capacity strengthen the positive impact of geopolitical risk. Further analysis shows that market competition and corporate financial asset holdings are potential channels through which geopolitical risk increases corporate innovation.

Suggested Citation

  • Wang, Xueting & Wang, Man, 2024. "Geopolitical risk and corporate innovation: Evidence from risk preference and risk-taking capacity perspectives," Economics Letters, Elsevier, vol. 241(C).
    • Handle: RePEc:eee:ecolet:v:241:y:2024:i:c:s0165176524003045
    DOI: 10.1016/j.econlet.2024.111820
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    References listed on IDEAS

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    More about this item

    Keywords

    Geopolitical risk; Corporate innovation; Risk preference; Risk-taking ability;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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