Corporate decisions in times of war: Evidence from the Russia-Ukraine conflict

Despite sanctions and public demand for companies to exit the Russian market due to its 2022 invasion of Ukraine, several firms chose to keep their businesses operating in Russia. We investigate the financial market reaction to announcements of companies remaining in Russia during the eventful two weeks following the invasion. Our findings show that a portfolio of remainers underperforms the leavers and the market benchmark. Investors impose a significant market penalty on the remainers. There is evidence of higher trading volume and selling pressure on remainers, suggesting equity markets are acutely sensitive to corporate decisions in times of political conflict.