In an era of increasing global instability, firms grapple with complex decisions regarding their operations in conflict-affected markets. 

A study, published in the Journal of Marketing, by researchers Alina Sorescu (professor in the Department of Marketing at Texas A&M University’s Mays Business School) and Mays’ Ph.D. graduates Larisa Kovalenko (The University of Texas at San Antonio) and Priya Rangaswamy (Baruch College), analyzed 289 announcements from 237 publicly traded U.S. and U.K. firms during the initial month of the Russia-Ukraine war. 

Their findings reveal that while suspending operations generally leads to negative short-term market reactions, this impact is significantly softened when such actions are anticipated. 

Specifically, negative investor reactions were less severe when:

• numerous competitors had already suspended operations
• public interest in the conflict was high
• the firm had a larger operational footprint in the affected market
• the firm had greater pre-conflict media coverage (for partial suspensions)

These factors indicate that investors process information and form expectations, leading to more attenuated market reactions when decisions are predictable due to industry pressure, public scrutiny, operational exposure, or transparency. 

This research offers vital guidance for managers navigating geopolitical crises, helping them understand and mitigate valuation losses associated with market withdrawal. The framework applies broadly to corporate decision-making in any international market facing geopolitical uncertainty. 

Read the full paper.

Featured Researcher

Alina Sorescu

Professor

Paula and Steve Letbetter ’70 Chair in Business

Chancellor’s EDGES Fellow

Department of Marketing

asorescu@mays.tamu.edu