Will the investment environment in the region where the company is located affect its financial risk? Evidence from Chinese listed companies

Abstract

Using data from Chinese listed companies from 2006 to 2020, this paper examines the impact of regional investment preferences on corporate financial risk. The results show that regional investment preference can reduce corporate financial risk significantly. Further research finds that fierce industry competition and policy uncertainty will enhance the relationship between regional investment preference and corporate financial risk. This paper not only supplements relevant literature on the financial risk factors of enterprises, but also verifies that the external environment of a company has a profound impact on corporate governance.