Companies Benefit from Exiting Russia to Protest Ukraine War

Companies that exited Russia to protest The Ukraine War are getting rewarded. Since Russia's unprovoked invasion of Ukraine in February nearly 1,000 companies withdrew from the Russian market. They are benefiting from a reputational boost as well as being rewarded by financial markets. In contrast, companies that contjnue to conduct business in Russia are punished.

That’s according to a new report from Yale Professor Jeffrey Sonnenfeld and his research team at the Yale School of Management. The team has been monitoring almost 1,300 companies that do business in Russia and has kept a list to highlight the decisions companies have made about staying or leaving since the start of the war on February 24.

“We find that equity markets are actually rewarding companies for leaving Russia while punishing those that remain behind, with divergent stock performance generally corresponding with the degree of Russian exit — which holds true across regions, sectors and company sizes,” according to the Yale report.

Companies in the global household and personal products industry that have fully exited Russia include Ball, BASF SE, Coty, Henkel, IMCD, L'Occitane and Reckitt.

What’s more, the focus on asset write-downs and lost revenue from Russia is misplaced. “We demonstrate that the shareholder wealth created through equity gains have already far surpassed the cost of one-time impairments for companies that have written down the value of their Russian assets,” asserts the report.

The report measures total shareholder returns at those companies that have exited Russia relative to those that have stayed. Researchers used February 23 as the start date as that, in the US, marked Russia’s launch of its overnight, full-scale invasion.The end data was market close on April 8. That provided a cutoff point before the start of first-quarter earnings season. That allowed the report to exclude the many other macro factors that were showing up in earnings, such as supply chain snags and inflation, issues that led many companies to lower their analyst guidance.