When doing the right thing doesn't pay: Impact of corporate decisions on Russian market participation in the wake of the Ukraine-Russia war

Abstract

This study investigates how the stock returns of firms that took corporate action against Russia following the onset of Ukraine-Russian war were impacted. We use traditional event-study methodologies to analyze the data. The findings indicate that the firms that opted to act against Russia in the wake of the onset of Ukraine-Russian war experienced a downward trend in cumulative abnormal returns (CARs) on average. Furthermore, we find that the stronger the action taken against Russia the more negative the average CARs. These findings are contrary to the idea that investors reward strong firm-level ESG actions and are robust to the choice of firms and event windows.