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Firm-level geopolitical risk and working capital adjustment across the firm life cycle: Evidence from a middle-income economy

Year: 2025

Type: article

Abstract: This study examines how firm-level geopolitical risk affects the speed of working capital adjustment in Indian firms, with a focus on business group affiliation and firm life cycle stages. We find that firm-level geopolitical risk decreases working capital speed of adjustment, reflecting heightened financial responsiveness to external uncertainty. Business group firms adjust faster, likely due to easier access to internal capital markets. Growth and mature-stage firms also show faster adjustment, while introduction and decline firms respond more cautiously, suggesting conservatism and resource slack.

Source: Finance research letters

DOI: 10.1016/j.frl.2025.108494

Authors: Himansu Sekhar Sethi, Saumya Ranjan Dash

Institutions: Indian Institute of Technology Bombay, Indian Institute of Management Indore

Language: English

Topic: Working Capital and Financial Performance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $3,730