Impact of internationalization on the financial risk of companies listed on B3: analysis of the moderating effects of ESG performance and periods of crisis
Keywords:International expansion, Financial risk, ESG performance, Crisis periods
Objective: Analyze the relationship between international expansion and financial risk of publicly traded non-financial Brazilian companies, considering the moderating effects of ESG performance and periods of crisis.
Method: Brazilian non-financial companies listed on B3 were used as a sample from 2010 to 2020. Multiple linear regressions were performed with fixed or random effects and panel data, and corporate and macroeconomic variables controlled the results.
Results: Companies with more international expansion tend to present a higher total risk but lower systematic risk. It was also found that ESG performance negatively moderates the relationship between international expansion and financial risk. Furthermore, more internationalized companies with higher ESG performance tend to reduce their total risk in times of crisis. Thus, although internationalization can increase financial risk, ESG performance can be used to mitigate it, especially in times of crisis.
Contributions: The study contributes to the theory by indicating that international expansion is distinctly related to total and systematic risks in the context of Brazilian companies. Furthermore, research indicates that ESG performance and periods of crisis have a moderating effect on the relationship between internationalization and financial risk. It also has practical implications, as it can help managers whose companies are in the process of internationalization to use ESG performance as a strategy to mitigate the financial risk of these companies, especially in times of crisis.
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