The Ripple Effect: Trade Linkages and the Stock Market Response to the Russia-Ukraine War

Talk by Marcus Biermann (Bielefeld University) as part of the Research Seminar Series of the IOS Economics Department.

This paper investigates how firms' international linkages to Russia and Ukraine affected investors' expectations following the escalation of the Russian-Ukrainian war. For this, we perform an event study around the Russian invasion of Ukraine on February 24, 2022, finding that firms with significant trade activity with Russia experienced a substantial reduction in cumulative returns. The effect on cumulative returns is especially pronounced for firms that are dependent on Russian commodities. The impact on the aggregate stock market performance of third countries was on average 0.8 percentage points. The highest losses were borne by European countries.