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Investigating the Effect of Financial Flexibility on Firms' Investment Preferences with the Interactive Role of Operational Risk
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Mehdi Khorramabadi *1   , Samira Seif2 |
1- Assistant Professor, Department of Accounting, Payame Noor University, Tehran, Iran , M.Khorramabadi@pnu.ac.ir
2- Assistant Professor, Department of Accounting, Payame Noor University, Tehran, Iran |
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Abstract: (12 Views) |
In recent years, the increasing tendency of firms to allocate resources to financial assets rather than real investments has raised concerns about changes in resource allocation patterns and the decline of productive investment. This study investigates the effect of financial flexibility on firms’ investment preferences and examines the moderating role of operational risk in this relationship. In this study, investment preference is defined as the ratio of real investment to financial investment.
To test the research hypotheses, panel data from 107 firms listed on the Tehran Stock Exchange over the period 2015–2023 were analyzed using panel data regression models.
The findings indicate that financial flexibility has a negative and statistically significant effect on firms’ investment preferences, suggesting that higher levels of financial flexibility are associated with a lower ratio of real investment to financial investment. Furthermore, operational risk plays a moderating role in this relationship, such that higher levels of operational risk weaken the negative effect of financial flexibility on investment preferences.
The findings provide a better understanding of the interaction between financial flexibility and operational risk in shaping corporate investment decisions. The results offer practical implications for corporate managers, investors, and policymakers in managing financial resources, assessing operational risk, and formulating effective investment strategies. |
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| Keywords: Financial flexibility, investment preferences, operational risk |
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Full-Text [PDF 1003 kb]
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Article type: Research |
Subject:
Special
Received: 2026/04/14 | Accepted: 2026/07/20
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