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When do political risks lead to divestment from a profitable market? Existing theories argue both that foreign investors may be sensitive to political tensions, but that they may only be sensitive to violent conflict. Using the crucial case of the US–China Trade War, we outline how political risks increased rates of exit among foreign firms while firm entrenchment mitigated these risks. Using a new dataset on all foreign-invested enterprises registered in China between 2017 and 2019, we implement triple interaction models to isolate the impact of increased political risks, investor national origin, and entrenchment on firm exit. Our findings show that heightened political risks during the trade war did increase firm exits by 34%–3% points over the pre-conflict baseline. Tariffs, the targeted effect of the trade war, increase US firm exits by 1% point. Firm exit is determined by the balance of heightened political risks against the availability of firm-level resources to mitigate these risks. These findings reconcile the conflicting expectations of the ‘business as usual’ and ‘follow the flag’ literatures about how firms respond to political risk, highlighting the tremendous collateral damage tariffs can cause in an age of global value chains.

When do political risks lead to divestment from a profitable market? Existing theories argue both that foreign investors may be sensitive to political tensions, but that they may only be sensitive to violent conflict. Using the crucial case of the US–China Trade War, we outline how political risks increased rates of exit among foreign firms while firm entrenchment mitigated these risks. Using a new dataset on all foreign-invested enterprises registered in China between 2017 and 2019, we implement triple interaction models to isolate the impact of increased political risks, investor national origin, and entrenchment on firm exit. Our findings show that heightened political risks during the trade war did increase firm exits by 34% – 3% points over the pre-conflict baseline. Tariffs, the targeted effect of the trade war, increase US firm exits by 1% point. Firm exit is determined by the balance of heightened political risks against the availability of firm-level resources to mitigate these risks. These findings reconcile the conflicting expectations of the 'business as usual' and 'follow the flag' literatures about how firms respond to political risk, highlighting the tremendous collateral damage tariffs can cause in an age of global value chains. [ABSTRACT FROM AUTHOR]

Attracting foreign direct investment (FDI) is not without challenges. Numerous barriers, including political instability, corruption, and macroeconomic policies, have been identified as significant impediments to foreign investment in Nigeria. Therefore, our study evaluates the impact of systemic corruption and political risk on Nigeria's FDI inflows. Our study employs the autoregressive distributed lag and fully modified ordinary least square models to analyze the key determinants influencing FDI decisions on a comprehensive dataset from 1996 to 2023. The study's findings reveal that higher levels of corruption and political instability negatively affect FDI inflows, deterring potential investors and undermining economic growth. Furthermore, we explore the moderating role of institutional quality and regulatory frameworks such as political stability and absence of violence, regulatory quality, rule of law and control of corruption in mitigating the adverse effects of corruption and political risk. The results underscore the necessity for robust anti-corruption measures and improved political stability to enhance Nigeria's attractiveness as an investment destination. The study recommends that addressing these systemic issues through effective anti-corruption measures and enhancing political stability is crucial for creating a more attractive investment climate. Highlights High corruption levels negatively affect foreign direct investment (FDI). A high level of perceived corruption raises transaction costs, reduces efficiency and deters domestic and foreign investment, making it harder to achieve long-term economic growth. GDP growth shows a notable negative correlation with the corruption perception index, implying that combating corruption may enhance economic growth. [ABSTRACT FROM AUTHOR]

Political risk forecasting is an industry that provides specialized analysis to a range of clients, including insurance companies, extractive industries, governments, defense ministries, and NGOs. Risk forecasters aim to help their clients mitigate risks by anticipating political developments that could threaten their investments and assets, especially in the "emerging markets" of the Global South. What can ethnographic analysis reveal about this industry's knowledge practices and how it transforms open‐source intelligence into commercially relevant risk forecasts? Based on five years of work experience as Senior Africa Analyst at a commercial intelligence firm, I examine how forecasters select and process risk‐relevant events, narrate them as qualitative risk briefs, and finally assign them quantitative risk scores. Through a close reading of a risk firm's internal guidelines and its daily practices, I show how analysts construct risk in African countries in line with entrenched sociopolitical imaginaries, reproducing the coloniality of finance. [ABSTRACT FROM AUTHOR]

The pursuit of a sustainable environment is a common goal for many nations; however, achieving this has become increasingly difficult due to country‐specific risks, often referred to as country risk. Despite its importance, the relationship between country risk and environmental outcomes is still in its early stages of exploration. This study aims to bridge this gap by examining the influence of country risk on India's ecological footprint within an asymmetric empirical framework, while accounting for economic growth and coal energy consumption. Utilizing the nonlinear autoregressive distributed lag (NARDL) estimator, the analysis covers data from 1984 to 2018. The findings reveal that positive changes in economic and financial risk contribute to environmental improvement by significantly reducing the ecological footprint, whereas negative changes in these risks lead to an increase in ecological footprint. Additionally, positive changes in political risk, economic growth, and coal energy usage exacerbate the ecological footprint, while reductions in coal energy use and political risk lead to environmental benefits. Based on these outcomes, policymakers are encouraged to establish a clear risk benchmark and reduce the ecological footprint by fostering economic growth in a sustainable manner. Governments should also prioritize strong support for green technology investments and ensure stability across political, economic, and financial sectors to promote long‐term environmental sustainability. [ABSTRACT FROM AUTHOR]

A binary, geopolitical narrative of a new "Great Game" for power in Central Asia may be too simplistic. It remains unclear what regionalisation trends will become embedded in Central Asia, with the apparent rise of China. The paper examines potential for China's Belt and Road Initiative to build new Eurasian economic interdependence through connectivity infrastructure and to reduce dependency for some actors on Russia. A political risk and grounded theory approach is taken, utilising in-depth interviews with local experts and stakeholders to develop a risk/opportunity framework. Conclusions from the research indicate China is unlikely in the foreseeable future to replace Russia as regional hegemon, but is likely to drive greater economic integration. Empirical investigation of dynamics on the ground - including the spectrum of options available to actors - is recommended for realist understanding of economic and other international connectivity trends across Central Asia. [ABSTRACT FROM AUTHOR]

Using an unbalanced panel data covering 75 countries from 1991 to 2019, the authors explore how the political risk impacts on food reserve ratio. The empirical findings show that an increasing political risk negatively affects food reserve ratio, and the same effects hold for both internal risk and external risk. Moreover, the authors find that the increasing external or internal risks both negatively affect food production and food exports, but external risk does not significantly impact food imports and it positively impacts food consumption, while internal risk negatively impacts food imports and food consumption. The results suggest that most governments have difficulty raising subsequent food reserve ratios in face of an increasing political risk, no matter if it is an internal risk or an external risk although the mechanisms behind the impacts are different. [ABSTRACT FROM AUTHOR]

Based on panel data of 138 countries from 1995 to 2019, this study fills the gap in the research of tourism risk mitigation mechanism by adopting the SYS-GMM method for the first time and innovatively verifying whether public policy can mitigate the impact of political risk on tourism from an international perspective. The study finds that political risk has a significant negative impact on international tourism and a far greater impact on tourist arrivals than on tourism economy. Heterogeneity results suggest that tourism in low-income countries is more susceptible to political risk, which has a greater impact on tourism in underdeveloped regions (e.g. Africa, Asia-Pacific). Interestingly, public policy can effectively mitigate the negative impact of political risk on international tourism, with the greatest mitigation effect on tourist arrivals and tourism revenues. This study helps policymakers to accurately grasp the impact of political risk on international tourism and provides targeted suggestions for countries to deal with political risk. [ABSTRACT FROM AUTHOR]

Abstract Attracting foreign direct investment (FDI) is not without challenges. Numerous barriers, including political instability, corruption, and macroeconomic policies, have been identified as significant impediments to foreign investment in Nigeria. Therefore, our study evaluates the impact of systemic corruption and political risk on Nigeria’s FDI inflows. Our study employs the autoregressive distributed lag and fully modified ordinary least square models to analyze the key determinants influencing FDI decisions on a comprehensive dataset from 1996 to 2023. The study’s findings reveal that higher levels of corruption and political instability negatively affect FDI inflows, deterring potential investors and undermining economic growth. Furthermore, we explore the moderating role of institutional quality and regulatory frameworks such as political stability and absence of violence, regulatory quality, rule of law and control of corruption in mitigating the adverse effects of corruption and political risk. The results underscore the necessity for robust anti-corruption measures and improved political stability to enhance Nigeria’s attractiveness as an investment destination. The study recommends that addressing these systemic issues through effective anti-corruption measures and enhancing political stability is crucial for creating a more attractive investment climate. Highlights High corruption levels negatively affect foreign direct investment (FDI). A high level of perceived corruption raises transaction costs, reduces efficiency and deters domestic and foreign investment, making it harder to achieve long-term economic growth. GDP growth shows a notable negative correlation with the corruption perception index, implying that combating corruption may enhance economic growth.

Previous research shows that domestic unrest, and especially violent conflict, raises political risk and discourages foreign direct investment (FDI). However, prior work primarily has studied private Western multinational corporations, not authoritarian China, the second largest overseas investor, which has both state-owned enterprises (SOEs) and privately-owned enterprises (POEs). This paper investigates the effects of domestic conflict on overseas Chinese FDI. We first compare Chinese SOE and POE investments in host states facing political unrest. Next, we disaggregate political unrest, examining the effect of violent and non-violent campaigns on Chinese SOEs and POEs. We then disaggregate the sector of FDI inflows. Contrary to prior conflict studies, we find host states under political unrest, and specifically violent campaigns, attract Chinese SOEs no matter the economic sector, whereas POEs are more risk averse. Our findings show that Chinese SOEs favor higher risk investments, suggesting the need for theoretical nuance in the domestic conflict and FDI literature. [ABSTRACT FROM AUTHOR]

This paper investigates the influence of firm-level political risk on the firm's supply of trade credit. Using a novel measure of firm-level political risk developed by Hassan et al. (2019), we find that firm-level political risk has a positive impact on the firm's trade credit extension. We also demonstrate that our results are not driven by macro financial and political events, firm-level political sentiment and non-political risks, and macro-level economic and political factors. Our result continues to hold after addressing the potential endogeneity concern. Additionally, we find that the positive impact of political risk on trade credit extension is more pronounced for firms selling differentiated goods and services. Furthermore, we demonstrate that extending trade credit enhances firm value when a firm faces higher political risk. This paper highlights the importance of considering firm-level heterogeneity in political risk. It also contributes to the literature on the determinants of trade credit extension and deepens our understanding of the relationship between political risk, trade credit, and corporate performance. [ABSTRACT FROM AUTHOR]

This paper investigates the relationship between liquidity, information asymmetry, political risk rating, government and regulatory quality rating for non-U.S. stocks in the energy industries listed on the New York Stock Exchange (NYSE). Our findings indicate that stocks from countries with higher government and regulatory quality and lower political risk tend to have narrower spreads, a smaller price impact of trades, and a higher market quality index. To explore the impact of political risk on liquidity and information asymmetry, we analyze political shocks resulting from the U.S.-China trade conflict on Chinese energy stocks. Our findings reveal that whenever the U.S.-China political tension escalates over trade policy, the market liquidity and information asymmetry for Chinese energy stocks worsen. This suggests that negative shocks have a detrimental impact on the liquidity of stocks from countries where political tension is escalated. [ABSTRACT FROM AUTHOR]

AbstractA common assumption in political economy theories of foreign direct investment (FDI) is that capital mobility declines once the multinational corporation (MNC) commits resources to a host site. It follows that the logic governing firm behavior changes after entry – a dynamic that has been too often neglected in the existing literature. I address the matter here, presenting a two-phase theory of FDI. During the ‘partnership initiation’ phase, firm decision-making follows an anticipatory logic; but this switches to an adaptive logic during the ‘partnership maintenance’ phase. I consider how this affects firms’ responsiveness to the host’s macro-political and economic environment, deriving distinct hypotheses that reflect the theorized change in FDI decision-making from one phase to the next. I test these hypotheses against data on FDI positions for more than 20,000 MNCs between 1994 and 2018. The evidence is consistent with the argument. As FDI research moves forward, we need to think not only about firm preferences, but also about firm behavior and how it changes with context. [ABSTRACT FROM AUTHOR]

While previous studies primarily use economy-wide indicators for political risk, Hassan et al. (Quart J Econ 134(4):2135–2202, 2019) propose that a significant portion of political risk manifests itself at the individual firm level. We use their measure of political risk to examine whether and how acquirers' firm-level idiosyncratic political risks affect their mergers and acquisitions (M&A) decisions based on a sample of U.S. firms. We find that firms exposed to a high level of perceived political risk are less likely to conduct M&As. Furthermore, the negative association between firm-level political risk and M&As is more pronounced when acquiring firms lack either financial capacities or non-financial political/social capacities. More importantly, while firms with high political risk generally delay M&As, we find evidence suggesting that acquiring firms may hedge against their firm-level political risk by strategically choosing low-risk M&A targets and conducting vertical integration. Finally, we show that effectively hedged deals exhibit superior post-M&A performance in terms of higher announcement return, lower likelihood of subsequent divestiture and higher post-acquisition change in financial performance. [ABSTRACT FROM AUTHOR]

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Existing research on the relationship between economic coercion and foreign direct investment suggests that sanctions have no effect on investments in targeted countries or may even encourage investment inflows. A key limitation of this research, however, is its aggregate country-level focus, which fails to capture company-level decision-making processes and factors shaping them. In contrast, this paper evaluates multinational companies' investment plans as reflected in new investment announcements and shows that sanctions in fact lead to significant adjustments in multinational companies' plans to invest in a targeted country. Our company-level analyses of new investment projects in Russia show that companies are less likely to announce new investments after the imposition of economic sanctions against the country. [ABSTRACT FROM AUTHOR]

This study examines the impact of political risk on financial markets by leveraging high-frequency (minute-by-minute) price data and precise event timestamps from media outlets' Twitter feeds during Pedro Castillo's failed coup attempt in Peru. Unlike previous research that relies on low-frequency data and protracted political changes, our analysis demonstrates that daily closing prices may misleadingly suggest negligible impact. In contrast, high-frequency data reveal that markets promptly and accurately incorporated news of the coup attempt and, in turn, its failure into asset prices. Our analysis shows that breakdowns in democratic governance negatively affect asset prices, while the restoration of the rule of law, in the form Congressional checks on the Executive branch, boosts them. Moreover, our analyses suggest that domestic companies and sectors with less mobile assets are more vulnerable to these political risks. Our findings underscore the crucial role of high-frequency data in accurately capturing how institutions and political risk affects equity markets. [ABSTRACT FROM AUTHOR]

This research presents a new model for analyzing the effects of government policies on climatic disasters on financial markets. Using Fama–MacBeth rolling regressions and the construction of model-proposed risk factors, three major risk factors are found to be significant in explaining stock returns. First, there is the risk of climate disasters. Second, there is the risk of uncertainty regarding government actions. Third, there is the risk of government response to climatic disasters. Through the increase in the cost of capital from climate disasters and the uncertainty of government response, the future cost of capital is higher, leading to less investment and lower productivity. However, the government's actions to compensate for losses due to climate damage help offset the damages from disasters. This implies that the previous estimates of economic damages due to climate risk have been underestimated. This work adds to the literature by providing a fuller estimate of the economic implications of climate change. [ABSTRACT FROM AUTHOR]

Hydrogen plays a pivotal role in global efforts to decarbonize energy and industrial sectors. The European Union, particularly Germany, anticipate a significant reliance on hydrogen imports in the medium to long term, identifying the Middle East and North Africa (MENA) region as a key potential producer and exporter of green hydrogen and its downstream products. Yet, investment risks pose significant challenges to advancing the region’s green hydrogen and synthetic fuel industries. However, systematic comparative risk analyses for these sectors across MENA countries remain limited. This study addresses the research gap by conducting a comparative risk assessment for renewable energy and green hydrogen and synthetic fuel development in 17 MENA countries. A comprehensive framework evaluating macro and micro risks was applied, along with two contrasting risk scenarios to explore future developments under different risk conditions. The findings reveal that while MENA countries hold promise, most face at least moderate risks, underscoring the complexity of fostering these industries regionally.

For many years, economic growth has been one the main objectives of economies around the world. Recently, the central focus has diverted from the quantitative to the qualitative approach. Mainstream research acknowledged that institutional quality along with country risk is among the most significant factors that contribute to the achievement of high economic development rates. Country risk is associated with the probability that investors or companies from a certain country will face greater instability or losses and includes financial, economic, and political risks. Lower political risk ranks first in the category of main drives that enable countries to attract more foreign direct investments and allow markets to operate efficiently. This article examined the recent evolutions in terms of the concept and main antecedents of the political risks, considering the current negative disruptions that economies were forced to experience, covering aspects related to health, wars, and economic downturns. The analysis identified that a high political risk negatively impacts demographics, environment, and the health system. The ability of countries to bounce back and develop a strong resilient economy toward adverse shocks depends on the institutional quality and the effectiveness of policymakers, who are responsible for elaborating efficient economic policies.

One of the top priorities of most countries around the world is sustainable development, to achieve which financial inclusion is identified as one of the key elements. Thus, unlike previous studies, the current study aims to channel the impact of financial inclusion on energy efficiency by constructing a parametric-based index that covers availability, accessibility, and usage of the former. The index provides an overall picture of financial services in all the three covered aspects. The analysis based on novel econometric time-series approaches, the method of moment quantile regression and the robust least square approach, shows that financial inclusion increases energy efficiency. The impact is overall positive for each quantile, i.e. 25th–90th. The impact of green innovation, human capital, and political risk is also supportive for energy efficiency. However, the impact of political risk improvement exhibits negative in the initial stages and turns positive later. In terms of policy implications, broadening financial inclusion base with the promotion of green innovation and human capital is important to achieve higher energy efficiency. In the meantime, improvement in the political risk profile should also be considered for a stable financial system to pave the way for increasing energy efficiency. [ABSTRACT FROM AUTHOR]

For many years, economic growth has been one the main objectives of economies around the world. Recently, the central focus has diverted from the quantitative to the qualitative approach. Mainstream research acknowledged that institutional quality along with country risk is among the most significant factors that contribute to the achievement of high economic development rates. Country risk is associated with the probability that investors or companies from a certain country will face greater instability or losses and includes financial, economic, and political risks. Lower political risk ranks first in the category of main drives that enable countries to attract more foreign direct investments and allow markets to operate efficiently. This article examined the recent evolutions in terms of the concept and main antecedents of the political risks, considering the current negative disruptions that economies were forced to experience, covering aspects related to health, wars, and economic downturns. The analysis identified that a high political risk negatively impacts demographics, environment, and the health system. The ability of countries to bounce back and develop a strong resilient economy toward adverse shocks depends on the institutional quality and the effectiveness of policymakers, who are responsible for elaborating efficient economic policies. [ABSTRACT FROM AUTHOR]

The political event-related literature has been growing over the past decades, generating a continuous stream of research and journal publications. This article aims to systematically review the impact of the political events on stock market literature to outline its current state, trends, gaps, and discrepancies. To this end, 111 political events-related articles published in 68 finance, economic and political journals were extracted. The retrieved pieces of literature were thoroughly examined using a comprehensive classification framework that emphasized broadly conceptual, theoretical, and methodological aspects. Finally, building on this literature, the paper proposes an extensive research agenda to help move the political event literature forward. [ABSTRACT FROM AUTHOR]

The study explores the nexus between crude oil prices (COP), financial risk index (FRI), political risk index (PRI), green innovation (GIN) and information globalization index (ING) for Shanghai stock exchange (SSE) in China from 1997/M9 to 2021/M12 by utilizes novel wavelet methodologies to handle co-movement dynamics of multivariate time series via moving weighted regression also wavelet-based causality employed to identify the causality. The finding of Wavelet regression indicates the highest multiple correlation from a linear combination of the and ING at each scale, which indicates these variables are impacted by the stock market index. While FRI relates investor confidence declining stock prices may be detrimental to the SSE. However, any changes in PRI government rules or regulations could influence SSE-listed enterprises. GIN develops and employs eco-friendly technologies and procedures. As global awareness of sustainability grows, pioneering green entrepreneurs may attract investors and increase corporate valuations. Investors may find green innovation-driven companies less enticing, resulting in lower stock prices. Yet, ING may propose improved access to global markets and information, hence increasing the value of SSE's shares. According to the findings of wavelet-based Granger Causality, COP, FRI, GIN, ING, PRI, and SSE show significant causal interconnections at several scales. The study offers policy insights based on these findings. [ABSTRACT FROM AUTHOR]

From the relationship perspective, combined with the regionality of enterprises’ specific advantages, and through the Logit regression method, the foreign direct investment events of Chinese multinational enterprises in 31 countries of “the Belt and Road” from 2009 to 2019 were taken as the research samples to explore the impact of relational assets on the location investment with political risk attributes of Chinese multinational enterprises along the “the Belt and Road” and discuss the regulating effect of bilateral diplomatic relations and market competition intensity. The results showed that multinational enterprises with host country relational assets tend to invest in high political risk locations, and friendly bilateral diplomatic relations and high market competition intensity can significantly enhance the positive impact between them. [ABSTRACT FROM AUTHOR]

Purpose: Geopolitical risks associated with the return of great power politics and growing nationalism have generated new challenges for foreign investors across industries. Oil and gas companies are well acquainted with such risks and have developed strategies to manage them. This paper reviews five of these strategies: divorcing ownership control from operating control in designing collaborative ventures; proactively managing stakeholder relationships; ensuring transparency and communication; diversifying risks while proactively positioning for emerging opportunities; and deliberately planning for exit should such an eventuality arise. Firms outside of oil and gas can draw on these strategies as they navigate the emerging geopolitical context. Design/methodology/approach: This paper reviews five strategies that oil and gas companies can use to manage geopolitical risk: divorcing ownership control from operating control in designing collaborative ventures; proactively managing stakeholder relationships; ensuring transparency and communication; diversifying risks while proactively positioning for emerging opportunities; and deliberately planning for exit should such an eventuality arise. Findings: This study identifies several strategies that oil and gas companies have used to manage geopolitical risks. These tools will be increasingly important in the shifting global political landscape. Originality/value: Drawing on the experiences of oil and gas companies, this study has identified several strategies that companies can use to shield themselves from the risks that are currently emanating from geopolitics. While these best practices originate in the experiences of oil and gas firms, the ability to deftly manage geopolitical risks is becoming an important prerequisite for companies across industries. [ABSTRACT FROM AUTHOR]

Research Question/Issue: We examine chief executive officers' (CEOs) lifetime work experience in private firms and its potential influence in shaping managers' style in public firms and their corporate policies and thus the market's perception of a firm's risk. Research Findings/Insights: We find that the idiosyncratic risk of public firms increases with the extent of CEO work experience in privately owned firms (CEO private experience). While there is no evidence of higher investment risk taking by private CEOs, the proportion of private‐firm work experience has a positive association with disclosure deficiency, decrease in manager‐owner agency conflicts, and an increase in political risk revelations at earnings conference calls, which, in turn, are associated with the elevation of idiosyncratic risk. Theoretical/Academic Implications: The findings of this study underscore arguments in the upper echelons theory, imprinting theory, and behavioral agency theory. The study also has implications for literature related to corporate disclosure, governance, and political risk. Practitioner/Policy Implications: Idiosyncratic risk is important for firms, as the literature suggests it hurts a firm's ability to finance future capital investments; therefore, it is optimal for corporate boards to have strategies in place to monitor and offer orientation packages targeted at alleviating CEO style heterogeneities presented by their prior work experience in private firms. [ABSTRACT FROM AUTHOR]

Research question/issue: We examine whether and how board diversity, measured by demographics (i.e., board gender, cultural diversity, tenure, social capital, expertise, and age) and structural diversity (i.e., board independence, size, board seat accumulation‐chair, board compensation, and board meeting frequency), influence corporate eco‐innovation. Research findings/insights: Utilizing a global sample of publicly listed companies for the period 2004–2019, we find that a one‐standard deviation increase in demographic and structural diversity translates into 4.66% and 7.11% higher corporate eco‐innovation, respectively. Furthermore, we discover that demographic and structural diversity promotes eco‐innovation by offsetting the negative effects of political risk. In an additional analysis, we find evidence that, in the absence of greater external monitoring (institutional investors and analyst following), organizations benefit more from the monitoring role of board diversity. Theoretical/academic implications: By adopting the concept of "bundling the governance mechanisms," our study adds to the ongoing discourse about the function of board diversity in addressing corporate climate footprints by offering original evidence that board diversity heterogeneity—demographic and structural diversity—matters for corporate eco‐innovation. Practitioner/policy implications: Given the increasing pressure on companies to manage their environmental impacts and carbon footprints, our paper has significant ramifications for those involved in promoting eco‐innovative business practices, such as policymakers, regulators, and practitioners. [ABSTRACT FROM AUTHOR]

Some research shows that foreign investors generally respond negatively to expropriation by host governments, and other research reveals that investors cope with expropriation. Why are there varied responses to expropriation? The nature of the obsolescing bargain—expropriation—is under-explored and measured unclearly in the political risk literature. I argue that investors respond more negatively to direct than indirect expropriation because the former is a more perceptible policy with clearer consequences for investors' control rights, which sets up expectations for comparatively worse predatory behavior by the government in the future. Additionally, investors could have a better chance to recover and profit from all of their investments after indirect expropriation compared to direct expropriation, therefore, investors would react more negatively to the latter. I conduct first-pass testing of this prediction using an original survey experiment focusing on the oil industry and using mass public subjects. Results show that the direct expropriation treatment group was less likely to want to reinvest, and the likelihood of wanting to exit to an outside option was higher for subjects who faced direct expropriation. I supplement the experimental findings with a quantitative analysis that is inconclusive and qualitative interviews of practitioners from the oil industry that support the experimental findings. [ABSTRACT FROM AUTHOR]

The quest for ecological sustainability while reducing the impacts of environmental deterioration has become a worldwide endeavour. Furthermore, it is unclear how developing economies such as Brazil can considerably improve environmental quality (EQ). This paper contributes to the ongoing literature by evaluating the effect of green finance, economic growth, political risk, social globalization and green innovation on environmental quality in Brazil. The study used data spanning between 2000Q1 and 2018Q4. Unlike other investigations, the current study used load capacity factor as a proxy for environmental quality, which considers both demand and supply sides of environmental issues. The current study applied the novel dynamic ARDL to capture the short and long‐run nexus. The bootstrap causality test was also applied to capture causal connection instabilities over time. The results of this study are as follows: (1) a significant and positive association was found between political risk, green finance, green innovation and social globalization environmental quality; (2) a significant and negative interplay was detected between economic growth and environmental quality; (3) The time‐varying causality shows a feedback causality at various periods between political risk, green finance, green innovation, economic growth, social globalization and environmental quality. This study also serves as a reference point for governments and policymakers in terms of investing in eco‐friendly technologies in order to improve environmental quality. [ABSTRACT FROM AUTHOR]

The main objective of this article is to investigate the impact of various financial, economic, and political risks and economic complexity on the development of the Sukuk market in the Iranian economy. The data required to conduct this research based on the variables of the proposed model were used from the Capital Market Central Asset Management Company, the International Country Risk Guide (ICRG) database, and the MIT University website. The data relating to 2010-2022 is seasonal, and REVIEWS 13 software was used. The model estimation results using the Nonlinear Autoregressive Distributed Lag Model Approach (NARDL) show that the negative shock of political risk reduces the development of the Sukuk market in the short and long term. The negative shock of financial risk in the long term has a negative impact on the development of the Sukuk market. The negative shock of economic complexity reduces the development of the Sukuk market in the short term. The positive shocks of political risk, financial risk, economic risk, and economic complexity in the short and long term led to the development of the Sukuk market. Among the three types of risk, political risk and financial risk have the most impact on sukuk market development. The error correction coefficient in this estimate is negative and statistically significant, which shows that 0.42% of the short-term imbalance is adjusted to reach the long-term balance every year. [ABSTRACT FROM AUTHOR]

Which factors make some American multinational corporations (MNCs) take political action in response to the US-China Trade War and cause others to stay on the sidelines? We identify China-based subsidiaries of US firms to identify firms' political actions in response to the trade war. We combine data on firms' tariff exposure, economic actions in China, and political actions in the United States during the trade war. Together these data highlight the divergent strategies with which firms engage. Even though more than 63 percent of MNCs in our sample were adversely impacted by tariffs, only 22 percent voice opposition and 7 percent exit in response to the trade war. Our analysis reveals that US MNCs in China differ in their business models, ownership structure, experience in China, and size of capital investments. These firm-level factors determine the degree to which US MNCs are embedded in China. This in turn shapes how firms perceive political risk and choose from the menu of options to deal with the trade war. Size and age increase voice while joint-venture status decreases it.

This research work estimates the impacts of political risk towards carbon emissions while incorporating the role of technological innovations, financial development, economic growth, and trade, in panel data of Pakistan, India, Bangladesh, and Sri Lanka. In doing so, the yearly data of 1984–2017 is analyzed by adopting an advanced econometric method of the cross-sectional autoregressive distributed lag (CS-ARDL) approach. The Westerlund co-integration test confirms the strong association among the variables, and the results of CS-ARDL show that innovations, economic growth, and trade are not environmentally friendly in South Asian countries. Furthermore, financial development and a stable political environment are important to achieve carbon neutrality in developing South Asian countries. This work diverts the attention of policymakers in making a stable political environment. This will improve the environmental quality and save these countries from future drastic climatic variability. [ABSTRACT FROM AUTHOR]

Research and development's role in achieving the Sustainable Development Goals is crucial. More specifically, to achieve a sustainable environment, the role of environment-related research and development expenditures, along with renewable energy research and development, is also important. This study focuses on the sustainable development perspective and the role of a sustainable environment via building a knowledge-based economy. A knowledge-based economy is more research and development oriented, and its role is undeniable in ensuring sustainable development. The current study focuses on the role of general research and development, environmental research and development, and cleaner energy research and development perspective for developed economies from 1989 to 2021. The study evaluated the role of research and development expenditures for the environment and cleaner energy on consumption-based carbon emissions along with political risk, income, green innovation, exports, and imports. The study used novel panel methods for econometric analysis. The study found that research and development expenditures for the environment and cleaner energy help limit carbon emissions. Moreover, reducing political risk, increasing green innovation, renewable energy consumption, and exports are also linked inversely with carbon emissions. In contrast, imports and income are deteriorating factors for consumption-based carbon emissions. The study recommends increasing research and development expenditures, encouraging green innovation, and limiting political risk for sustainable development. [ABSTRACT FROM AUTHOR]

The research explores the impact of political risk on foreign direct investment in Vietnam. The dataset for political risk employed in this research consists of twelve factors from the International Country Risk Guide, offering a comprehensive assessment of Vietnam's political landscape. The research utilises Principal Component Analysis to consolidate twelve political risk items, examining their influence alongside GDP growth, inflation rate and trade openness. With data spanning from 1994 to 2021, ARIMA models are employed due to non-stationarity issues from secondary data set. The findings indicate that while economic factors contribute to FDI, political risk variables like governance quality, military involvement, and economic stability have profound impacts. The study suggests that enhancing governance and reducing military politics are key to attracting FDI, offering insights for policymakers and investors to navigate Vietnam's investment landscape. [ABSTRACT FROM AUTHOR]

Terrorist attacks have important social, political, and economic effects. One of the effects of terrorism involves the impact on foreign direct investment (FDI). While existing research suggests that terrorism negatively impacts FDI by increasing political risks, it is unclear how the effects of terrorism are conditioned by host country institutions. Political institutions may affect investors' perceptions of political risk following a terrorist attack by shaping expectations of future political risk. We argue that the conditional effect of institutions and terrorism is non-linear: Terrorism has a negative effect on FDI inflows to countries with a medium level of institutional effectiveness only. Using quantitative analyses of FDI flows and political risk ratings, we show that terrorism has no effect on FDI in host countries with very high or very low levels of political institutional effectiveness. In a qualitative analysis of FDI and terrorism during the civil wars in Algeria and El Salvador, we demonstrate that concerns about institutional effectiveness played an important role in producing disinvestment by foreign investors. This research contributes to the literature on the determinants of FDI, effects of terrorism and political risk, and suggests that institutions play an important role in affecting how investors perceive political risk. [ABSTRACT FROM AUTHOR]