Geopolitical Uncertainty And Corporate Investment Behaviour

Sammanfattning

This study examines how geopolitical uncertainty influences corporate investment and financial performance in emerging‑market energy firms. Using a balanced panel of 44 publicly listed energy companies across 11 emerging economies from 2016–2025, the analysis draws on real options theory, pecking order theory, and institutional theory. Two uncertainty measures are employed: the Geopolitical Risk Index (GPR), capturing global geopolitical shocks, and the World Uncertainty Index (WUI), reflecting country‑level policy and economic uncertainty. Fixed‑ and random‑effects panel regressions show that higher domestic uncertainty, measured by the WUI, significantly reduces both investment and operating performance. In contrast, global geopolitical risk does not have a statistically significant direct effect once oil price dynamics are controlled for. The findings indicate that persistent domestic uncertainty poses a greater constraint on investment efficiency and profitability than transitory global geopolitical shocks in emerging‑market energy firms.