Are environmentally friendly firms more vulnerable to the Russia-Ukraine crisis?

Wajih Abbassi (), Sabri Boubaker (), Riadh Manita and Dharen Kumar Pandey
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Wajih Abbassi: IRG - Institut de Recherche en Gestion - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - Université Gustave Eiffel
Sabri Boubaker: Métis Lab EM Normandie - EM Normandie - École de Management de Normandie = EM Normandie Business School, VNU - Vietnam National University [Hanoï]
Riadh Manita: NEOMA - Neoma Business School
Dharen Kumar Pandey: IIM Sambalpur - Indian Institute of Management Sambalpur

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Abstract: This paper applies an event study approach to assess the effect of the Russia-Ukraine crisis on environmentally friendly firms. Using a sample of 1206 firms from the S&P Global 1200 index covered from 6 January 2021, to 8 March 2022, we find that, ceteris paribus, cumulative abnormal returns are significantly related to the environment score. While the environmental scores positively affect the pre-event window CARs, firms with higher environmental scores are more detrimentally affected during the Russia-Ukraine war. This can be attributed to the expected increase in post-war compliance costs for these firms, given the detrimental effects of the war on the environment. This study contributes to the literature by showing that firms with high environmental scores are not necessarily more resilient to war shock events than those with environmental concerns and by providing empirical evidence regarding firm-specific characteristics that drive event-induced returns, indicating that risks may be diversified based on firm and industry characteristics. This study has policy implications because, while it shows that a high environmental score does not necessarily make a firm more resilient, it sheds light on firm-specific characteristics that drive war event-induced returns.

Keywords: Russia-Ukraine crisis; Environmental score; Event study; Market model; Book-to-market ratio (search for similar items in EconPapers)
Date: 2025
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Published in International Journal of Accounting, Auditing and Performance Evaluation, inPress

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04980150

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