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Corporate Performance and Policies Under Scrutiny: Guilty by Association?

Author

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  • Hanousek, Jan
  • Hramiak, Iryna
  • Megginson, William L.
  • Shamshur, Anastasiya

Abstract

In this paper, we examine the impact of Russia’s 2014 annexation of Crimea on firm performance in Ukraine, focusing on firms with Russian affiliations. Using a difference-in-differences approach, we find that firms with Russian majority ownership experienced a significant decline in performance compared to those without Russian ties. This decline stems from reduced sales, lower investment, restricted access to financing, and increased financial constraints. Notably, we differentiate between firms with visible Russian affiliations, such as Russian names, and those with Russian majority ownership. Our results show that deeper financial connections, rather than mere visibility, drive the negative impact. Firms with Russian ownership were also more likely to exit the market following the conflict. These findings provide important insights into how geopolitical risks affect corporate performance and firm strategic decisions

Suggested Citation

  • Hanousek, Jan & Hramiak, Iryna & Megginson, William L. & Shamshur, Anastasiya, 2024. "Corporate Performance and Policies Under Scrutiny: Guilty by Association?," CEPR Discussion Papers 19771, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:19771
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    Keywords

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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • M16 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - International Business Administration

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