Yale study finds stock market rewarding companies that exited Russia

The stock market is rewarding businesses and organizations that have withdrawn or curtailed operations in Russia in response to its invasion in Ukraine, according to a recent study by Yale researchers.

Jeffrey Sonnenfeld, the founder and president of Yale Chief Executive Leadership Institute, and his team of researchers compiled a set of over 1,200 companies and analyzed businesses’ decisions to continue to operate in Russia, curtail operations to differing degrees or withdraw completely.

The researchers created a A-F grading system, assigning a letter to each business based on how little or how much they have chosen to withdraw their operations. 

An “A” means “companies making a clean break/permanent exit from Russia and/or leaving behind no operational footprint” while an “F,” on the opposite end of the scale, means “companies defying demands for exit or reduction of activities largely doing business-as-usual,” according to their study, posted on May 25.

The study found that out of 600 publicly traded companies included in their list, those which received an “A” grade and made their announcement (or another indicator of their decision) between Feb. 23 and April 8 performed better in the stock market compared to companies that received an “F” grade during that interval.

According to one tabulation alone, researchers found 3.96 in gains for companies that left versus negative 5.47 for companies that chose to stick it out in Russia. According to a similar tabulation, which included a slightly larger of interval between Feb. 23 and April 19, researchers found 3.57 in gains for companies that left compared to negative 6.82 for those which remained.

“Despite disproportionate focus on asset write-downs and lost revenue from Russia, 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,” the researchers wrote in their abstract.

The Russian invasion of Ukraine has continued for months. Russian forces have renewed focus on eastern Ukraine after a failed attempt to make inroads in and around the capital city of Kyiv.

Following the Russian invasion of Ukraine, major American corporations took steps to halt or limit their business in Russia. Companies such as McDonalds, Apple and Levi’s altered operations in Russia amid the war.