Are ESG Ratings Informative About Companies' Socially Responsible Behaviors Abroad? Evidence from the Russian Invasion of Ukraine

Ahmed, Daniyal; Demers, Elizabeth; Hendrikse, Jurian; Joos, Philip; Lev, Baruch

doi:10.2139/ssrn.4151996

Cited by 4 publications

(16 citation statements)

References 8 publications

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“…In contrast, financial exposure to Russia negatively influences exit decisions (Pajuste and Toniolo, 2022). However, recent studies on the impact of ESG scores on withdrawals from Russia have produced mixed results (Huang et al, 2022;Ahmed et al, 2023), which may be accounted for by imperfect sampling and the limited observation period.…”

Section: Empirical Literaturementioning

confidence: 99%

“…Surprisingly, both mainstream theories and recent studies theorizing corporate decisions to exit Russia have overlooked the effect of organizational values (Essele, 2022), even though empirical research has already tested ESG variables to proxy this effect (Huang et al, 2022;Ahmed et al, 2023). We also note that, in another research context, recent studies have already explored the effect of corporate moral values (communalism vs universalism), on various corporate policies, such as entry into a specific country, the treatment of employees, environmental performance and the distribution of dividends (Hasan et al, 2023).…”

Section: Introductionmentioning

confidence: 99%

“…Empirical studies have analyzed a wide range of non-economic antecedents of foreign divestment (Nyuur et al, 2017), including in the context of the Russo-Ukrainian war (Ahmed et al, 2023;Evenett and Pisani, 2023;Sonnenfeld et al, 2023;Mol et al, 2023). However, only a few of these have explored, with mixed results, the impact of the ESG criteria on exit decisions on moral grounds (Huang et al, 2022;Ahmed et al, 2023). Hence, analyzing the ESG effect on exit decisions from Russia will be our empirical contribution.…”

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

“…Empirical studies have analyzed a wide range of non-economic antecedents of foreign divestment (Nyuur et al. , 2017), including in the context of the Russo–Ukrainian war (Ahmed et al. , 2023; Evenett and Pisani, 2023; Sonnenfeld et al.…”

Section: Introductionmentioning

confidence: 99%

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Doing business in Russia: normative organizational resilience, organizational identity and exit decisions

Avioutskii,

Roth

2024

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PurposeOur study examines multinational enterpris (MNE) decisions to withdraw from the Russian market on moral grounds in reaction to the Russo–Ukrainian war. We investigate to what extent these decisions reflect the normative organizational resilience of MNEs under institutional pressures in Russia. We test the impact of various macro- (home democracy, institutional quality, stakeholder pressure) and micro-variables (ESG criteria) that define the organizational identities of MNEs in relation to their withdrawal decisions. Our sample comprises 1,648 companies from 55 countries doing business in Russia before the start of the conflict.Design/methodology/approachTo test our hypotheses, we perform a nuanced analysis using both latent constructs and regression analysis on data for 1,648 MNEs.FindingsOur results are in line with the foreign divestment literature, suggesting that MNEs are likely to exit normatively distant countries.Originality/valueIn this study, we explore the impact of organizational values on normative responses of MNEs to a geopolitical crisis. We introduce a normative organizational resilience construct to demonstrate how MNEs respond to institutional pressures in a host country, in this case Russia. Making exit decisions on moral grounds, MNEs have acted as social actors endowed with moral sense and intentionality, in conformity with their organizational values.

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Section: Empirical Literaturementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Doing business in Russia: normative organizational resilience, organizational identity and exit decisions

Avioutskii,

Roth

2024

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Factors influencing the multinational banks’ decisions to curtail operations in russia: Does ESG matter?

Rohov,

Kolodiziev,

Yehorycheva

et al. 2024

Banks and Bank Systems

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The paper is devoted to an under-researched topic of the international business community’s reaction to russia’s armed aggression against Ukraine. It aims to evaluate how G7 and EU financial sanctions, institutional pressure, ESG ratings, and asset value of multinational banks in russia influence their decisions to reduce activities in the invading country. The study used the Yale CELI database of companies leaving and staying in Russia for the classification tree method. The results show that none of the banks headquartered in G7 and EU member states that had no or relatively little assets in russia before the invasion are doing business there on a pre-war scale. Unlike banks headquartered in other countries, most either curtailed their presence in that market or exited the market. This indicates that financial sanctions imposed by G7 and EU member states and institutional pressure on banks in these countries to withdraw from the russian market have proven effective to a certain extent. However, these factors do not meaningfully influence the business of multinational banks with significant assets in russia. The study has not confirmed the hypothesis that a bank with higher ESG ratings is more likely to curtail its operations in the market of an aggressor country and withdraw. However, nearly all banks that scaled back significant activities or even pulled out of russia have better ESG indicators than the industry average. The results suggest the feasibility of improving the methodologies of ESG rating providers for accurately measuring business reactions to aggression and war crimes.

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Does withdrawal from/remaining in an aggressor country affect companies’ ESG ratings? Case study of the Russia-Ukraine war

Dincă

Vezeteu

Dincă

2023

Front. Environ. Sci.

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As we mark one year since the start of the Russia-Ukraine war, countries and companies alike continue to adapt to this unprecedented disruption in the global economy and the subsequent uncertainty. One aspect that has not been thoroughly addressed from this conflict is its effect on companies’ ESG ratings and how the decision to remain or withdraw from Russia influences these ratings. To study this, a panel regression methodology on ESG data was applied on a significant number of companies before and after the start of the conflict. According to the results obtained, it would seem that insofar neither the overall ESG scores, nor the Social Scores are influenced by companies’ decisions to leave or to stay in Russia after 24-th of February 2022. We consider that these are not final outcomes and it will require further investigations and methodology improvements. The paper provides insights for ESG ratings providers, regulators and asset managers on the effects of companies’ decision to withdraw from/remain in an invading country on ESG ratings.

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Are ESG Ratings Informative About Companies' Socially Responsible Behaviors Abroad? Evidence from the Russian Invasion of Ukraine

Cited by 4 publications

References 8 publications

Doing business in Russia: normative organizational resilience, organizational identity and exit decisions

Doing business in Russia: normative organizational resilience, organizational identity and exit decisions

Factors influencing the multinational banks’ decisions to curtail operations in russia: Does ESG matter?

Does withdrawal from/remaining in an aggressor country affect companies’ ESG ratings? Case study of the Russia-Ukraine war

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