This study explores the moderating role of corporate diversification between economic policy uncertainty (EPU) and corporate investment relationship. Using firm-level panel data of US firms over the period 2000–2020, we show that corporate diversification positively moderates the negative impact of EPU on corporate investment by reducing financial constraints. The analysis indicates that diversification mitigates the adverse impact of EPU on US firms’ investment. Furthermore, our results are robust to alternative proxies, subsample tests, selection bias, and endogeneity concerns. The findings are helpful from a managerial perspective, suggesting that diversification alleviates financial constraints, enabling firms to-- mitigate the negative impact of EPU on investment.

Purpose: This study aims to analyze the impact of corporate risk taking on the sustainability of firms in USA and Germany. As risk taking is an expensive phenomenon, the firm may shift the resources from stakeholder well-being to profit maximization of shareholders. Ultimately, risk taking results in the reduction of firm’s sustainability.Design/methodology/approach: To capture the impact of corporate risk taking, the corporate-governance variables, i.e. “independent board structure” and “board size,” were used as instrumental variables to control excessive corporate risk taking and restrict it at a healthy level. A sample of 3,387 unbalanced panel observations from USA and Germany, for the period 2004-2015, were assessed.Findings: The results confirm that corporate risk taking has a negative and significant impact on the sustainability of firms.Research limitations/implications: Government and policymakers in USA and Germany may introduce regulations to curb excessive corporate risk taking for sustainable corporations and sustainable society. This research suggests that corporate risk taking is not in the best interest of stakeholders.Originality/value: Previous literature only finds the impact of sustainability on corporate risk taking and there is not a single study that examines the impact of corporate risk taking on the sustainability of a firm. Thus, this study contributes to existing literature on corporate risk taking and sustainability. The study further contributes by using the instrumental variable two stage least square.

This research aims to investigate the influence of bank capital, risk-based capital and bank capital buffers on the behaviour of bank risk-taking by applying GMM on the data of US commercial banks ranges from 2002 to 2018. The findings show that bank capital has a positive influence on total risk. However, risk-based capital and capital buffer have a negative impact on total risk. In addition, the results showed that the relationship between bank asset risk and bank capital, risk-based capital and a capital buffer is negative in pre, amid and post-crisis periods. The findings also reveal that the result of bank capital, risk-based capital and a capital buffer is not similar in case of well, adequately, under, significantly under, and critically undercapitalized banks. Our conclusions have numerous implications for policymakers and regulators in the banking sector.