Abstract
<jats:p>We examine how Western sanctions imposed in response to Russia’s 2022 invasion of Ukraine shaped firm-level stock market performance in the EU and the US. To measure sanction exposure, we link firms to the specific products targeted by US and EU sanctions at the HS6 level, producing a detailed, firm-level indicator. We use a classical finance event study to analyze investor reactions around three salient moments in the pre-invasion period: Biden’s initial sanction threat, the collapse of US-Russia diplomatic talks, and the first sanctions announcement. We complement this with a staggered difference-indifferences design that exploits cross-firm variation in the timing of product level listings to trace the effects of sanctions as they accumulated over time. Stock market losses in the EU are substantially larger than in the US, and the gap between sanctioned and non-sanctioned firms is modest and shortlived. Investors price in sanction risk ahead of formal implementation, and subsequent expansions of existing sanction regimes generate little additional market response.</jats:p>