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This paper investigates how geopolitical risk influences firm profitability worldwide. Using a global panel of 7126 listed companies from 2013 to 2023, the analysis reveals that geopolitical shocks do not affect firms uniformly. Less profitable and financially fragile firms experience the strongest declines in profitability when geopolitical tensions rise, while more profitable firms show greater resilience and, in some cases, strategic gains. The results also indicate that financial structure, liquidity, tangibility, and innovation capacity explain much of this heterogeneity, highlighting that vulnerability is rooted in both balance sheet fragility and adaptive capability. These findings suggest that geopolitical instability reinforces performance asymmetries across firms and industries, with implications for corporate strategy, investor behavior, and financial stability in an increasingly uncertain global environment.
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; Dumitrescu, Bogdan Andrei 2
; Tănăsescu, Paul 3 ; Leonida Ionel 4 ; Andreea-Mădălina, Bozagiu 3 ; Poleac Dalia 5
1 Department of Finance, Banking and Business Administration, Titu Maiorescu University, 040051 Bucharest, Romania; [email protected]
2 “Victor Slăvescu” Centre for Financial and Monetary Research, Calea 13 Septembrie, 050711 Bucharest, Romania; [email protected], Faculty of Finance and Banking, Bucharest University of Economic Studies, Piața Romană 6, 010374 Bucharest, Romania; [email protected] (P.T.); [email protected] (A.-M.B.)
3 Faculty of Finance and Banking, Bucharest University of Economic Studies, Piața Romană 6, 010374 Bucharest, Romania; [email protected] (P.T.); [email protected] (A.-M.B.)
4 “Victor Slăvescu” Centre for Financial and Monetary Research, Calea 13 Septembrie, 050711 Bucharest, Romania; [email protected]
5 Faculty of Business Administration in Foreign Languages, Bucharest University of Economic Studies, 010961 Bucharest, Romania; [email protected]