Document Type

Working Paper

Abstract

We examine the relationship between geopolitical risk (GPR) and corporate investments considering 395 Indian hospitality sector firms from 2003 to 2020. We find a statistically significant negative association among the variables of interest. We also observe that even the less financially constrained firms cannot mitigate the adverse effects of GPR entirely. We further report that firms in this industry reduce investments more when the GPR rises compared to an increase in investments when the GPR falls by an equal proportion. Nonetheless, the optimum deployment of security forces can alleviate the adversities of GPR to a considerable extent. Our findings add further insights to the existing knowledge, which may be helpful for regulators and business leaders in other emerging markets.

Publication Date

1-1-2024

Publisher

Indian Institute of Management Bangalore

Relation

IIMB Working Paper-694

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