The Impact of Sanctioning Russia on Stock Price: Case from McDonald’s Suspension and Business Retreat

Abstract

Since the outbreak of the Russia-Ukraine conflict, an array of countries, international organizations, and business entities have declared their political stances in favor of Ukraine. Many have imposed certain sanctions against Russia to intimidate its further military operation. But such conduct deflected from its initial virtues, leading to a lose-lose situation. Based on event study methodology, this paper applies CAPM to the analysis of the effects of sanctioning on stock prices of listed companies, taking McDonald’s as an example. The statistical results reveal that the mild sanction, temporary business suspension, did not disturb the stock return significantly. On the other hand, the radical sanction, the complete business withdrawal from Russia, negatively affected McDonald’s stock performance. Since international relationships between major countries remain murky, business owners and individuals engaging in global trades ought to recognize the insidious effects of the imposition of sanctions, and be cautious about the timing and expected public responses to their proclamations to get well-prepared to confront ensuing challenges.