IDEAS home Printed from https://ideas.repec.org/a/eee/riibaf/v66y2023ics0275531923001976.html
   My bibliography  Save this article

Does supporting Ukraine pay well? The performance of companies that suspended their business in Russia

Author

Listed:
  • Ayoub, Mahmoud
  • Qadan, Mahmoud

Abstract

Using recent data about US companies that announced they were suspending their business activities in Russia following the invasion of Ukraine, we test how their decision affected their stock prices and forward-looking volatility. Using the event-study approach as well as the difference-in-difference model, we find that these firms, on average, experienced a reduction (increase) in their value (implied volatility). However, this reduction (increase) did not last more than one to two weeks. We explain the results using the classic financial paradigm and the counterbalancing impact of social responsibility. Our results are robust to a battery of robustness checks and empirical designs.

Suggested Citation

  • Ayoub, Mahmoud & Qadan, Mahmoud, 2023. "Does supporting Ukraine pay well? The performance of companies that suspended their business in Russia," Research in International Business and Finance, Elsevier, vol. 66(C).
    • Handle: RePEc:eee:riibaf:v:66:y:2023:i:c:s0275531923001976
    DOI: 10.1016/j.ribaf.2023.102071
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0275531923001976
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ribaf.2023.102071?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Caroline Flammer, 2015. "Does Corporate Social Responsibility Lead to Superior Financial Performance? A Regression Discontinuity Approach," Management Science, INFORMS, vol. 61(11), pages 2549-2568, November.
    2. Rui Albuquerque & Yrjö Koskinen & Chendi Zhang, 2019. "Corporate Social Responsibility and Firm Risk: Theory and Empirical Evidence," Management Science, INFORMS, vol. 65(10), pages 4451-4469, October.
    3. Andrew Ang & Geert Bekaert, 2007. "Stock Return Predictability: Is it There?," The Review of Financial Studies, Society for Financial Studies, vol. 20(3), pages 651-707.
    4. Henri Servaes & Ane Tamayo, 2013. "The Impact of Corporate Social Responsibility on Firm Value: The Role of Customer Awareness," Management Science, INFORMS, vol. 59(5), pages 1045-1061, May.
    5. Ronald W. Masulis & Syed Walid Reza, 2015. "Agency Problems of Corporate Philanthropy," The Review of Financial Studies, Society for Financial Studies, vol. 28(2), pages 592-636.
    6. Sudheer Chava, 2014. "Environmental Externalities and Cost of Capital," Management Science, INFORMS, vol. 60(9), pages 2223-2247, September.
    7. Long Chen & Zhi Da & Xinlei Zhao, 2013. "What Drives Stock Price Movements?," The Review of Financial Studies, Society for Financial Studies, vol. 26(4), pages 841-876.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gillan, Stuart L. & Koch, Andrew & Starks, Laura T., 2021. "Firms and social responsibility: A review of ESG and CSR research in corporate finance," Journal of Corporate Finance, Elsevier, vol. 66(C).
    2. Sun, Zeyu & Li, Xiaohui & Xie, Jing & Cheng, C.S., 2023. "How does dividend payout affect corporate social responsibility? A channel analysis," Journal of Financial Stability, Elsevier, vol. 68(C).
    3. Lu, Hao & Osiyevskyy, Oleksiy & Liu, Xiaoyu, 2023. "Enhancer or stabilizer? Investigating the distinct impact of primary and secondary CSR on the level and variability of firm value," Journal of Business Research, Elsevier, vol. 168(C).
    4. Angelidis, Timotheos & Michairinas, Athanasios & Sakkas, Athanasios, 2024. "World ESG performance and economic activity," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 93(C).
    5. Liu, Xianda & Hou, Wenxuan & Main, Brian G.M., 2022. "Anti-market sentiment and corporate social responsibility: Evidence from anti-Jewish pogroms," Journal of Corporate Finance, Elsevier, vol. 76(C).
    6. Fairhurst, Douglas (DJ) & Greene, Daniel T., 2022. "Too much of a good thing? Corporate social responsibility and the takeover market," Journal of Corporate Finance, Elsevier, vol. 73(C).
    7. Li, Chengcheng & Wang, Xiaoqiong, 2022. "Local peer effects of corporate social responsibility," Journal of Corporate Finance, Elsevier, vol. 73(C).
    8. Wenzhi Ding & Ross Levine & Chen Lin & Wensi Xie, 2022. "Competition laws, ownership, and corporate social responsibility," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(8), pages 1576-1602, October.
    9. Nils Engelhardt & Jens Ekkenga & Peter Posch, 2021. "ESG Ratings and Stock Performance during the COVID-19 Crisis," Sustainability, MDPI, vol. 13(13), pages 1-15, June.
    10. Gao, Feng & Li, Yubin & Wang, Xinjie & Zhong, Zhaodong (Ken), 2021. "Corporate social responsibility and the term structure of CDS spreads," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 74(C).
    11. Shackleton, Mark & Yan, Jiali & Yao, Yaqiong, 2022. "What drives a firm's ES performance? Evidence from stock returns," Journal of Banking & Finance, Elsevier, vol. 136(C).
    12. Hans B. Christensen & Luzi Hail & Christian Leuz, 2021. "Mandatory CSR and sustainability reporting: economic analysis and literature review," Review of Accounting Studies, Springer, vol. 26(3), pages 1176-1248, September.
    13. Abeysekera, Amal P. & Fernando, Chitru S., 2020. "Corporate social responsibility versus corporate shareholder responsibility: A family firm perspective," Journal of Corporate Finance, Elsevier, vol. 61(C).
    14. Alves, Carlos Francisco & Meneses, Lilian Lima, 2024. "ESG scores and debt costs: Exploring indebtedness, agency costs, and financial system impact," International Review of Financial Analysis, Elsevier, vol. 94(C).
    15. Xin Dai & Feng Gao & Ling Lei Lisic & Ivy Xiying Zhang, 2023. "Corporate social performance and the managerial labor market," Review of Accounting Studies, Springer, vol. 28(1), pages 307-339, March.
    16. He, Guanming & Li, Zhichao & Yu, Ling & Zhou, Zhanqiang, 2023. "Contribution to poverty alleviation: A waste or benefit for corporate financing?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 89(C).
    17. Tamas Barko & Martijn Cremers & Luc Renneboog, 2022. "Shareholder Engagement on Environmental, Social, and Governance Performance," Journal of Business Ethics, Springer, vol. 180(2), pages 777-812, October.
    18. Benjamin Lynch & Martha O'Hagan‐Luff, 2024. "Relative corporate social performance and cost of equity capital: International evidence," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(3), pages 2882-2910, July.
    19. Hasan, Iftekhar & Karavitis, Panagiotis & Kazakis, Pantelis & Leung, Woon Sau, 2019. "Corporate Social Responsibility and Profit Shifting," MPRA Paper 91580, University Library of Munich, Germany.
    20. Daewoung Choi & Hyunju Shin & Kyoungmi Kim, 2023. "CEO’s Childhood Experience of Natural Disaster and CSR Activities," Journal of Business Ethics, Springer, vol. 188(2), pages 281-306, November.

    More about this item

    Keywords

    Cash flow; Event study; Geopolitical risk; Russia; Social responsibility; Ukraine; Implied volatility;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:riibaf:v:66:y:2023:i:c:s0275531923001976. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ribaf .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.