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

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  • 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
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    Cited by:

    1. Simone Boccaletti & Paolo Maranzano & Caterina Morelli & Elisa Ossola, 2024. "ESG Performance and Stock Market Responses to Geopolitical Turmoil: evidence from the Russia-Ukraine War," Working Papers 544, University of Milano-Bicocca, Department of Economics.
    2. Pan, Changchun & Song, Yuhang & Jin, Long, 2024. "Stock price spillovers from foreign institutional investor divestment: Evidence from BlackRock's closure of the China Flexible Equity Fund," International Review of Financial Analysis, Elsevier, vol. 96(PB).
    3. Pandey, Dharen Kumar & Al-ahdal, Waleed M. & Rusere, Warren & Ali, Azwadi & Nor, Safwan Mohd, 2024. "Impact of firm characteristics and country-level governance on global energy stocks during crises," Research in International Business and Finance, Elsevier, vol. 72(PA).

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    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

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