RESEARCH ARTICLE
A risk–return trade-off or co-movement? Are food processing firms risk-averse?
Subhadip Mukherjee,
Soumyatanu Mukherjee,
Mamata Parhi,
Kun Duan,
Ahmed Usman,
Subhadip Mukherjee
Indian Institute of Management Shillong, Shillong, Meghalaya, India
Search for more papers by this authorSoumyatanu Mukherjee
Southampton Business School, University of Southampton, Southampton, UK
Search for more papers by this authorMamata Parhi
Roehampton Business School, Roehampton University, London, UK
Search for more papers by this authorCorresponding Author
Kun Duan
School of Economics, Huazhong University of Science and Technology, Wuhan, China
Correspondence
Kun Duan, School of Economics, Huazhong University of Science and Technology, Wuhan 430074, China.
Email: [email protected]
Search for more papers by this authorAhmed Usman
School of Economics, Finance and Accounting, Coventry University, Coventry, UK
Search for more papers by this authorSubhadip Mukherjee,
Soumyatanu Mukherjee,
Mamata Parhi,
Kun Duan,
Ahmed Usman,
Subhadip Mukherjee
Indian Institute of Management Shillong, Shillong, Meghalaya, India
Search for more papers by this authorSoumyatanu Mukherjee
Southampton Business School, University of Southampton, Southampton, UK
Search for more papers by this authorMamata Parhi
Roehampton Business School, Roehampton University, London, UK
Search for more papers by this authorCorresponding Author
Kun Duan
School of Economics, Huazhong University of Science and Technology, Wuhan, China
Correspondence
Kun Duan, School of Economics, Huazhong University of Science and Technology, Wuhan 430074, China.
Email: [email protected]
Search for more papers by this authorAhmed Usman
School of Economics, Finance and Accounting, Coventry University, Coventry, UK
Search for more papers by this authorFirst published: 17 January 2023
Abstract
We build a two-moment decision-theoretic framework to study how firms in the food-processing industry negotiate between risk and return while relying on imported inputs for production at an intensive margin. Two possibilities emerge: either a co-movement or a trade-off in risk and return under various industry and economic conditions. Building on our theoretical setting, we design a testable empirical framework that considers a panel of 316 firms in the Indian food-processing industry between 1993 and 2009. We find strong evidence of a decrease in the absolute risk aversion preference, although the magnitude varies measurably across firms.
Open Research
DATA AVAILABILITY STATEMENT
The data that support the findings of this study are available from the corresponding author upon reasonable request.
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