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Corporate decisions in times of war: Evidence from the Russia-Ukraine conflict

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  • Tosun, Onur Kemal
  • Eshraghi, Arman

Abstract

Despite sanctions and public demand for companies to exit the Russian market due to its 2022 invasion of Ukraine, several firms chose to keep their businesses operating in Russia. We investigate the financial market reaction to announcements of companies remaining in Russia during the eventful two weeks following the invasion. Our findings show that a portfolio of remainers underperforms the leavers and the market benchmark. Investors impose a significant market penalty on the remainers. There is evidence of higher trading volume and selling pressure on remainers, suggesting equity markets are acutely sensitive to corporate decisions in times of political conflict.

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  • Tosun, Onur Kemal & Eshraghi, Arman, 2022. "Corporate decisions in times of war: Evidence from the Russia-Ukraine conflict," Finance Research Letters, Elsevier, vol. 48(C).
    • Handle: RePEc:eee:finlet:v:48:y:2022:i:c:s1544612322001908
    DOI: 10.1016/j.frl.2022.102920
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    11. Hayakawa,Kazunobu & Kumagai,Satoru, 2022. "The trade effect of economic sanctions: evidence from the 2022 Russia-Ukraine conflict," IDE Discussion Papers 857, Institute of Developing Economies, Japan External Trade Organization(JETRO).
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    More about this item

    Keywords

    Sanctions; Market reaction; Corporate decisions; Ukraine; Russia;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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