Who cares about sanctions? Observations from annual reports of European firms

Denis Davydov, Jukka Sihvonen and Laura Solanko

No 5/2021, BOFIT Discussion Papers from Bank of Finland Institute for Emerging Economies (BOFIT)

Abstract: This paper uses textual analysis to examine how European corporations assess sanctions in their annual reports. Using observations from a panel of almost 11,500 corporate annual reports from 2014-2017, we document significant cross-country variation in how firms perceive Russia-related sanctions. Even after controlling for firm-level characteristics, cross-country differences remain for sentiments about sanctions and contexts in which sanctions are mentioned. We also examine the role of macroeconomic linkages in explaining these differences. We show that the Russia's inward and outward FDI stocks and high levels of imports and exports with Russia only partially explain the cross-country variation, leaving a nontrivial share of variation unexplained.

Keywords: sanctions; textual analysis; European firms; annual reports (search for similar items in EconPapers)
JEL-codes: D22 F51 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-cis, nep-int and nep-tra
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https://www.econstor.eu/bitstream/10419/240383/1/dp2105.pdf (application/pdf)

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Journal Article: Who cares about sanctions? Observations from annual reports of European firms (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofitp:bdp2021_005

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