The market reaction of energy companies to the announcement of the Russian–Ukrainian invasion

Purpose This study aims to empirically analyze the market response of energy companies to the Russian-Ukrainian invasion. Additionally, it examines the comparison of market reactions between companies in NATO member countries and non-member countries. Design/methodology/approach This study utilizes a sample of 1,511 energy sector companies. To achieve the research objectives, two methods are employed. First, an event study is used to analyze the market reaction using Cumulative Abnormal Return (CAR) to the announcement of Russia's invasion of Ukraine on February 24, 2022 (event day) within an event window of (−30, +30). Second, a cross-sectional analysis is conducted to compare the responses of companies in NATO member countries with those in non-member countries. Findings The findings of this study reveal that energy companies worldwide reacted positively both before and after the announcement of the invasion, with significant reactions observed in companies from the Americas, Europe, and Asia & Pacific regions. However, the Middle East and Africa markets did not show significant reactions. Furthermore, the study indicates that most developed and emerging markets responded positively, likely due to the increase in energy commodity prices during the war. Moreover, the market reaction of companies in NATO member countries was stronger compared to other markets. Originality/value This study contributes to the existing literature by being the first to examine the impact of the Russian invasion of Ukraine on the energy sector, while categorizing markets as developed, emerging, and frontier. It also specifically explores the market reaction of energy companies in NATO member countries, providing unique insights into the differential responses within the energy sector.