Heterogeneous stock market impact of Russia–Ukraine War for oil and gas companies

Purpose This paper aims to examine the short-term market impact of the beginning of the military conflict between Russia and Ukraine (24 February 2022), the world’s largest oil and gas companies. Design/methodology/approach The authors examine the world’s 100 largest listed oil and gas companies at and around the beginning of the military conflict between Russia and Ukraine using an event study methodology. Findings The authors observe a positive and statistically significant stock price reaction at and around the military conflict. These results are consistent with the asset pricing perspective. Conversely, the stock market returns of Russian oil and gas companies, as well as those companies that were “forced” to divest in Russia due to corporate activism, exhibit a negative and statistically significant impact from the conflict. These reactions are reinforced or mitigated by company-specific characteristics such as size, profitability and institutional ownership. Finally, the findings indicate that companies engaged in oil and gas exploration and production report abnormally higher returns compared to firms in the other two subsectors of the industry. Originality/value The effect of the war on stock markets has been relatively little examined in the financial theory. This study intends to fill this gap in the literature.