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

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  • Sethi, Himansu Sekhar
  • Dash, Saumya Ranjan

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.

Suggested Citation

  • Sethi, Himansu Sekhar & Dash, Saumya Ranjan, 2025. "Firm-level geopolitical risk and working capital adjustment across the firm life cycle: Evidence from a middle-income economy," Finance Research Letters, Elsevier, vol. 86(PC).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pc:s1544612325017489
    DOI: 10.1016/j.frl.2025.108494
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