@DmytroKuleba Pulling out of Russia is not only morally right, but also profitable for business. @YaleSOM research proves that companies leaving Russia are generously rewarded by markets while those remaining suffer financial and reputation risks. Pull out of Russia, feel good, make profits!
As of June 08, 2022
Signals for foreign business
The companies that have opted to pull out of Russia following its unprovoked invasion of
Ukraine are not just benefiting from a reputational boost. They are also being rewarded
by financial markets, while those who remain behind are being punished.
● According to researchers from the Yale School of Management (USA), public
companies that left Russia after its invasion of Ukraine are rewarded with huge profits
from the stock market. And those who remain, on the contrary, have both financial
and reputation risks. It holds true across regions, sectors, and company sizes.
● The shareholder wealth created through equity gains has already far surpassed the
cost of one-time impairments for companies that have written down the value of
their Russian assets and gave up revenue from the Russian market. This is stated in a
report1 by Yale University professor Jeffrey Sonnenfeld and his research team. The
team monitored more than 1,200 companies doing business in Russia.
● For example, 6 large companies (Heineken, Shell, Exxon, Carlsberg, AB InBev, and
Societe Generale) that incurred asset write-downs of over $14 billion in Russia but
have generated nearly $39 billion in subsequent equity gains. Each of these
companies had positive stock performance after the announcements of their exits
from Russia and the values of their asset write-downs.
● The analysis of global capital flows demonstrates the importance investors attribute
to the decision to withdraw from Russia. And that investors believe the global
reputational risk incurred by remaining in Russia at a time when nearly 1,000 major
global corporations have exited far outweigh the costs of leaving.
● Equity markets are not the only asset class where financial markets have clearly been
rewarding companies for leaving Russia while punishing those that remain. The same
trend is evident across credit markets – specifically the pricing of corporate debt –
and related derivative products.
● There’s also the risk to companies that have not exited Russia operations of being
boycotted by younger people, who as both prospective customers and employees are
carefully attuned to corporate values and are quick to take action when they are
International business is leaving the Russian market
● As of June 05, KSE Institute identified2 about 2,213 companies, organizations and
their brands from 75 countries and 55 industries on the Russian market. About half
of them are public ones. The value of capital invested in the country (about $113
billion), local revenue (about $200 billion), as well as staff (almost 0.7 million people).
● 1,537 foreign companies have reduced, suspended or ceased operations in Russia.
The number of the companies that have curtailed Russian operations – 1 087. The
number of the companies that have reduced current operations and hold off new
Investments – 450.
● As of June 05, companies that declared a complete withdrawal from Russia had
$26.2bn in revenues and $17.2bn in capital; companies that suspended their
operations on the Russian market had annual revenue of $64.8bn and $35.8bn in
● TOP-70 companies: the largest taxpayers paid ~ $20,2bn of taxes annually – haven’t
completely withdrawn yet, although suspended or scaled back.
● Half-hearted decisions are not enough. If the world wants the future and freedom to
prevail over the past and tyranny, one cannot fight the evil with one hand and give it
medicine, revenues, and other resources with the other. The most important thing:
stop making any kind of business with Russia. Stop paying taxes that finance the
Russians weapons which are killing us. Join the anti-Putin coalition.
Russia is a toxic jurisdiction and a business partner. Russians are constantly worsening
their own business environment.
● The corporate sector has decided to withdraw from Russia because of the compliance
risks. But also because of toxicity of working with Russia.
● On May, 24 the Parliament of the Russian Federation adopted the Draft Law “On
External Administration for Management of the Organization”. The proposed bill3, in
fact, legitimizes state raiding. This document provides for the possibility of appointing
an external administration for enterprises with at least 25% of foreign capital. If the
document turns into law, all foreign major shareholders are in danger of losing their
investments and property in Russia.
● On March 30, the government of the Russian Federation de facto canceled
responsibility for imports of branded goods without the permission of the trademark
holder. This allows Russian companies to bring in and resell goods manufactured
outside of Russia without the permission of a manufacturer or a brand owner.
Through this decision, Russia stripped global companies of the voice on how their
products and intellectual property are used. In fact, it is an intellectual property theft
authorized by the Russian government.
● Initiatives like these are a grave warning to the companies around the world that still
plan doing business in Russia: you will lose your money and assets in Russia, sooner
or later. Moreover, you will be out of reach of any civilized court to recover. The only
rational decision is to pull out now when direct and indirect damage can still be