The Effects of 2022 Russian Invasion of Ukraine on Global Stock Markets: An Event Study Approach

Abstract

This study examines the stock market reactions to the Russian invasion on Feb. 24 in 2022. Using an event study methodology, we document that the war has a different impact on stock markets across countries and sectors, depending on how deeply the countries or industries are involved in the war. Country-level analysis confirms that firms in EU countries have experienced a huge decline in cumulative abnormal returns while firms in other countries away from the battlefield seem not to be significantly affected. Sector-level analysis shows that the manufacturing sector in EU countries is heavily affected by the war and finance and services sectors show a negative effect to a larger extent than manufacturing. In addition, Russian oil and gas firms are negatively affected by the war. Our findings suggest economic consideration is likely to be the compelling factor for Russian governments to halt its war in Ukraine.

Keywords: The Russian invasion, global stock markets, event study, economic consideration.

JEL Classification: G14, G15, G12.