Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments March 24, 2022 erstellt
Beschreibung:
What determines firms’ decisions to exit Russia because of the Ukraine invasion and do investors appreciate firms’ social image management? We test five potential firm motives, the reputation concern and social sanction channel, the altruism channel, the institution and law origin channel, the security and defense concern channel, and the stakes in war channel. For multinational firms that suspend or withdraw business from Russia, they have higher ESG overall scores, especially the social score and the environment score. However, firms with higher ESG scores tend to take longer to announce their withdrawal and their degree of cutoff from Russia is also the “softest” as they could be ready to resume business in Russia when the invasion is over. They are also more likely to have headquarters in a country with a higher security concern, public social-awareness, institutional quality, a common law origin, or a policy to impose sanctions on Russia at the country level. We find no evidence that stakes in Ukraine or Russia affect firms’ decisions to exit Russia. These firms also suffered a 58 bps drop in stock price after their announcements of the business suspension in Russia, and there is no evidence that they earn a stock market “reputation premium” relative to firms that refuse to exit. Overall, our evidence supports the reputation concern channel instead of pure altruistic motives. Moreover, the fact that the marginal investors do not appreciate the cutoff from Russia suggests that non-pecuniary costs in the form of social sanction or long-term ESG fund outflow potentially drives firms’ exit from Russia