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- Title
Firm reaction to geopolitical crises: Evidence from the Russia‐Ukraine conflict.
- Authors
ALAM, MD ASIF UL; Devos, Erik; Feng, Zifeng
- Abstract
This paper investigates corporate announcements related to the Russia‐Ukraine conflict of S&P 500 firms. We observe that firms withdrawing from Russia or suspending operations possess higher cash levels. Additionally, firms with more cash seem to announce withdrawals or suspensions more promptly. These findings suggest that cash levels are pivotal in how firms respond to geopolitical events. While cash does not seem influential when firms announce donations due to the conflict, it does affect the speed of such announcements. Social media also appears to play a significant role. Examining investor reactions to donation or withdrawal/suspension announcements, we report negative returns surrounding these announcements. Our paper underscores the critical role of cash reserves (i.e., financial flexibility) in shaping firm reactions to geopolitical events.
- Subjects
RUSSIA; UKRAINE; RUSSIA-Ukraine Conflict, 2014-; STANDARD &; Poor's 500 Index; GEOPOLITICS; CRISES; SOCIAL media; EARNINGS announcements; FINANCIAL market reaction
- Publication
Journal of Financial Research, 2023, Vol 46, pS163
- ISSN
0270-2592
- Publication type
Article
- DOI
10.1111/jfir.12354