Does financial flexibility drive firm's risk‐taking in emerging markets? The moderating role of investment efficiency

Using a sample of 2301 listed firms from emerging markets for 2014–2023, we examine the effect of financial flexibility (FF) on firm risk‐taking (FRT) and how this relationship is moderated by investment efficiency (INVEFF). GMM and bias‐corrected method of moments models indicate a positive impact of FF on FRT. Notably, INVEFF emerges as a significant moderator, influencing the FF–FRT relationship. High INVEFF strategically amplifies the effect of FF on FRT. Robustness analysis ensures the stability of study findings. This study contributes valuable insights to the nuanced understanding of the FF–FRT relationship in emerging markets.