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.