Investment Inefficiency and Geopolitical Risks: Evidence from Vietnam

This study examines the effects of geopolitical risks on the investment efficiency of Vietnamese firms from 2017 to 2024 using fixed effect models and a series of robustness tests. The research findings reveal a negative effect of geopolitical risks on corporate investment efficiency through the channel of information asymmetry. Additionally, the negative effects of geopolitical risks on Vietnamese firms’ investment efficiency are more pronounced for financially constrained firms, underinvested firms, or UPCOM-listed firms. Based on the main findings, both policymakers and corporate managers should consider the geopolitical risks and their impacts when designing new government policies and corporate strategies in order to mitigate the negative effects of these risks on Vietnamese firms.