Continuous fluctuations in the global macro‑financial environment are transmitted directly to firms’ operational outcomes through the corridors of capital cost, exchange rate turbulence, and disruptions in cash flows—a phenomenon that, in emerging economies, is more intense and sensitive due to institutional frictions and exogenous constraints. Focusing on the Tehran Stock Exchange, this study seeks to answer the strategic question of whether Financial Risk Management (FRM) can act as a shock absorber and reduce the sensitivity of performance stability to external shocks.
To achieve this goal, the research data were collected via a structured 32‑item instrument, drawing on the views of 286 key informants (chief financial officers and risk managers). A three‑year reference horizon was used in the responses in order to distinguish institutionalized organizational routines from episodic events. The structural validity of this instrument was established using ordinal confirmatory factor analysis (WLSMV), which supported a four‑factor structure comprising the stages of sensitization, assessment, implementation, and monitoring‑governance.
In testing the hypotheses, standardized moderation regressions with robust inference (HC3) were employed. The analysis indicates that although intensification of external shocks is systematically associated with a decline in performance stability, FRM capabilities are positively linked to stability and, beyond that, exhibit a significant interactive effect. More precisely, as the level of financial risk management improves, the negative slope of the relationship between shock and stability becomes flatter, indicating a reduction in firms’ performance sensitivity to environmental turbulence.
Complementary findings, obtained through the Johnson–Neyman procedure and stability tests (such as removing items closely related to the outcome), confirm the robustness of this moderating role. Furthermore, an exploration of effect heterogeneity reveals that this shock‑absorbing power is primarily concentrated in firms with high foreign‑exchange exposure—a pattern fully consistent with the logic of financial transmission of shocks in sanctioned markets. These results remind financial managers that, in highly volatile environments, liquidity discipline and balance sheet architecture are not a choice but a necessity for survival and performance stability.