Uncertainty, risk aversion and corporate performance: evidence from the Asia-Pacific region

Abstract

We investigate the impacts of global, regional, and pandemic uncertainties on firm performance in the Asia-Pacific region. Using the fixed effects panel-data analysis for 5979 non-financial listed firms in five developed Asia-Pacific countries (Singapore, Hong Kong, South Korea, Japan, and Australia) from 2007 to 2021, the results show that world, regional and pandemic uncertainties negatively affect firm performance in the region at different levels. Further, the study discloses that the pandemic uncertainties affected firm performance more strongly than world uncertainties and regional uncertainties. The results also demonstrate the moderating effect of risk aversion on the uncertainty–firm performance relationship. In particular, low leverage and high current ratio help reduce the adverse impacts of uncertainty on corporate performance in the Asia-Pacific region.

Keywords:

• Asia-Pacific region
• firm performance
• risk aversion
• uncertainty

JEL CLASSIFICATION:

• G30
• G32

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Notes on contributors

Dao Le Trang Anh

Dr. Dao Le Trang Anh is a lecturer in the School of Business and Management, RMIT University, Hanoi, Vietnam and visiting lecturer at Lincoln University, New Zealand. She earned her MSc. Financial Forecasting and Investment at the University of Glasgow, the UK, and her PhD in Accounting and Finance at Lincoln University, New Zealand. She published several journal articles and book chapter on the international ranked-journals in financial economics, social sciences, and COVID-19 impacts on stock markets. She is awarded ‘Literati Award Winners 2022’ for Outstanding Paper of Journal of Economic Studies. Dr. Anh’s research areas are corporate finance, stock market, and Asian studies. Email: [email protected] Linkedin: https://www.linkedin.com/in/dao-le-trang-anh-27668535/

Christopher Gan

Professor Christopher Gan is the Head of Department of Financial and Business System, Lincoln University, New Zealand. He has been Chief Editor of Review of Applied Economics since 2004. He is in the editorial board of several international journals. Professor Gan’s research focus includes microfinance, corporate finance, development economics, and Asian studies. Email: [email protected]

Shan Jin

Shan Jin is a PhD candidate in the Faculty of Agribusiness and Commerce, Lincoln University, New Zealand. She obtained her Master of Commerce and Management (Finance) in 2022. Her Master’s research focused on financial inclusion and household welfare in rural China. She received ‘Outstanding Investment Research’ award in the CFA institute research challenge, New Zealand. Her research focuses on microfinance, banking, and financial markets. Email: [email protected]

Nguyen Tuan Anh

Dr. Nguyen Tuan Anh is a researcher at BIDV Training and Research Institute (BTRI) since 2015. He achieved his PhD in Economics and Finance at Lincoln University, New Zealand in 2022 and MSc. in Finance and Risk at University of East London, the United Kingdom in 2013. His research interests lie primarily in banking, rural and agricultural finance, corporate governance, financial crisis, and Asian economies. Email: [email protected]