Investment Strategies and Corporate Risk-Taking: A BRICS Market Perspective

Corporate governance literature extensively explores the determinants of corporate risk-taking, however consensus on the key motivating factors remains elusive. Addressing this gap, we examine the role of investment efficiency, financial flexibility, and investment scale as drivers of corporate risk-taking in emerging markets, offering insights to help firms make informed high-stakes investment decisions. Using a sample of 4,889 listed firms from BRICS countries (Brazil, Russia, India, China, and South Africa), we analyze three distinct periods: (a) the full sample, (b) the pre-COVID period, and (c) the COVID period. Applying static and dynamic panel estimation techniques, our generalized method of moments, results confirm that financial flexibility, investment efficiency, and investment scale significantly and positively influence corporate risk-taking across all three periods. Furthermore, quantile regression results highlight that these factors exert a stronger influence in the upper and median quantiles of risk-taking. These findings suggest that investment efficiency, financial flexibility, and investment scale serve as enablers that empower firms to undertake calculated risks, seize growth opportunities, and strengthen their market positioning. Robustness checks affirm the stability of our results, and we conclude with key policy implications.