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Exploring the Relationship between Risk and Performance in Listed Indian Firms

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  • Ranjan DasGupta
  • Soumya G. Deb

Abstract

This paper analyses the relationship between a firm’s accounting risk and performance for a large sample of listed Indian firms observed over the period 2000–2015. We find evidence that the relationship is not absolute but contingent on the level of firm performance. We show that poorly performing firms below a threshold level of performance exhibit a ‘paradoxical’ or inverse relationship, while the firms above the threshold exhibit a non-linear relationship with a clear point of inflection. We posit that the former observation is due to a risk-seeking behaviour by the poor performers in line with behavioural finance theories while the latter is a result of a mixed-risk-behaviour.

Suggested Citation

  • Ranjan DasGupta & Soumya G. Deb, 2020. "Exploring the Relationship between Risk and Performance in Listed Indian Firms," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 27(3), pages 411-430, September.
    • Handle: RePEc:taf:ijecbs:v:27:y:2020:i:3:p:411-430
    DOI: 10.1080/13571516.2020.1767981
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    Cited by:

    1. DasGupta, Ranjan & Deb, Soumya G., 2022. "Role of corporate governance in moderating the risk-return paradox: Cross country evidence," Journal of Contemporary Accounting and Economics, Elsevier, vol. 18(2).
    2. DasGupta, Ranjan & Dhochak, Monika, 2021. "Risk-Antecedents of Firms and Strategic Mediators – New Evidence from a Cross-Country Analysis," American Business Review, Pompea College of Business, University of New Haven, vol. 24(1), pages 3-35, May.
    3. DasGupta, Ranjan & Roy, Arup, 2023. "Firm environmental, social, governance and financial performance relationship contradictions: Insights from institutional environment mediation," Technological Forecasting and Social Change, Elsevier, vol. 189(C).

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