A risk–return trade‐off or co‐movement? Are food processing firms risk‐averse?

Subhadip Mukherjee, Soumyatanu Mukherjee, Mamata Parhi, Kun Duan, Ahmed Usman

Research output: Contribution to journalArticlepeer-review


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.
Original languageEnglish
Pages (from-to)(In-Press)
JournalInternational Journal of Finance and Economics
Early online date17 Jan 2023
Publication statusE-pub ahead of print - 17 Jan 2023


  • exchange rate risk
  • food-processing industry
  • imported intermediate inputs
  • mark-up estimation
  • risk aversion elasticity
  • risk preference

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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