Should I stay or should I go? Stock market reactions to companies' decisions in the wake of the Russia-Ukraine conflict

Florian Kiesel; Sascha Kolaric

doi:10.1016/j.intfin.2023.101862

Should I stay or should I go? Stock market reactions to companies' decisions in the wake of the Russia-Ukraine conflict

Florian Kiesel^*, Sascha Kolaric

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

Abstract

We examine the share price reaction of 1281 firms with Russian operations when they announce their decision to leave or stay in the Russian market following the outbreak of the armed conflict between Russia and Ukraine on February 24, 2022. We observe positive stock returns to leave decisions (+0.67 % during the three days surrounding the announcement), but do not find any significant reaction for stay decisions. We provide evidence that leave decisions are announced earlier if the initial share price reaction to the outbreak of the armed conflict was more pronounced, indicating that investors may appreciate a clear commitment to exit the Russian market. The results do not indicate that firm decisions (leave or stay) are based on previous stock returns, but we find that firms with larger negative returns at the beginning of the conflict obtain more positive returns around the firms' decision announcements. Finally, we show that firms that change their initial decision are more likely to opt to leave the Russian market than to stay.

Original language	English
Article number	101862
Pages (from-to)	1-22
Number of pages	22
Journal	Journal of International Financial Markets, Institutions and Money
Volume	89
Early online date	11 Oct 2023
DOIs	https://doi.org/10.1016/j.intfin.2023.101862
Publication status	Published - Dec 2023

Keywords / Materials (for Non-textual outputs)

corporate decisions
conflict
Russia
Ukraine
abnormal stock returns

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KieselKolaricJIFMIM2023ShouldIStayOrShouldIGoFinal published version, 2 MBLicence: Creative Commons: Attribution (CC-BY)

Cite this

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title = "Should I stay or should I go? Stock market reactions to companies' decisions in the wake of the Russia-Ukraine conflict",

abstract = "We examine the share price reaction of 1281 firms with Russian operations when they announce their decision to leave or stay in the Russian market following the outbreak of the armed conflict between Russia and Ukraine on February 24, 2022. We observe positive stock returns to leave decisions (+0.67 % during the three days surrounding the announcement), but do not find any significant reaction for stay decisions. We provide evidence that leave decisions are announced earlier if the initial share price reaction to the outbreak of the armed conflict was more pronounced, indicating that investors may appreciate a clear commitment to exit the Russian market. The results do not indicate that firm decisions (leave or stay) are based on previous stock returns, but we find that firms with larger negative returns at the beginning of the conflict obtain more positive returns around the firms' decision announcements. Finally, we show that firms that change their initial decision are more likely to opt to leave the Russian market than to stay.",

keywords = "corporate decisions, conflict, Russia, Ukraine, abnormal stock returns",

author = "Florian Kiesel and Sascha Kolaric",

note = "Funding Information: ☆ We would like to thank Marc Berninger for providing research support by performing some preliminary analyses for the first draft of the paper. This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors. Publisher Copyright: {\textcopyright} 2023 The Author(s)",

year = "2023",

month = dec,

doi = "10.1016/j.intfin.2023.101862",

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T1 - Should I stay or should I go? Stock market reactions to companies' decisions in the wake of the Russia-Ukraine conflict

AU - Kiesel, Florian

AU - Kolaric, Sascha

N1 - Funding Information: ☆ We would like to thank Marc Berninger for providing research support by performing some preliminary analyses for the first draft of the paper. This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors. Publisher Copyright: © 2023 The Author(s)

PY - 2023/12

Y1 - 2023/12

N2 - We examine the share price reaction of 1281 firms with Russian operations when they announce their decision to leave or stay in the Russian market following the outbreak of the armed conflict between Russia and Ukraine on February 24, 2022. We observe positive stock returns to leave decisions (+0.67 % during the three days surrounding the announcement), but do not find any significant reaction for stay decisions. We provide evidence that leave decisions are announced earlier if the initial share price reaction to the outbreak of the armed conflict was more pronounced, indicating that investors may appreciate a clear commitment to exit the Russian market. The results do not indicate that firm decisions (leave or stay) are based on previous stock returns, but we find that firms with larger negative returns at the beginning of the conflict obtain more positive returns around the firms' decision announcements. Finally, we show that firms that change their initial decision are more likely to opt to leave the Russian market than to stay.

AB - We examine the share price reaction of 1281 firms with Russian operations when they announce their decision to leave or stay in the Russian market following the outbreak of the armed conflict between Russia and Ukraine on February 24, 2022. We observe positive stock returns to leave decisions (+0.67 % during the three days surrounding the announcement), but do not find any significant reaction for stay decisions. We provide evidence that leave decisions are announced earlier if the initial share price reaction to the outbreak of the armed conflict was more pronounced, indicating that investors may appreciate a clear commitment to exit the Russian market. The results do not indicate that firm decisions (leave or stay) are based on previous stock returns, but we find that firms with larger negative returns at the beginning of the conflict obtain more positive returns around the firms' decision announcements. Finally, we show that firms that change their initial decision are more likely to opt to leave the Russian market than to stay.

KW - corporate decisions

KW - conflict

KW - Russia

KW - Ukraine

KW - abnormal stock returns

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DO - 10.1016/j.intfin.2023.101862

M3 - Article

SN - 1042-4431

VL - 89

SP - 1

EP - 22

JO - Journal of International Financial Markets, Institutions and Money

JF - Journal of International Financial Markets, Institutions and Money

M1 - 101862

ER -

Should I stay or should I go? Stock market reactions to companies' decisions in the wake of the Russia-Ukraine conflict

Abstract

Keywords / Materials (for Non-textual outputs)

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