Factors Influencing Company's Propensity to Divestment - Analysis of International Exits from Russian Market

This research is devoted to the study of factors affecting the propensity of an international company to sell its foreign asset, namely by analyzing the exits of international companies from the Russian market started due to the beginning of the known events of 2022. The paper begins with a literature review that discuss the factors influencing the likelihood of a foreign company to sell a foreign subsidiary. Logistic regressions are then used for the analysis of the current situation in the international market in order to identify patterns and factors affecting a company's propensity to sell its Russian subsidiary, determining how the probability of an international company to divest depends on both financial factors as well as industrial and geographical ones. The sample considered includes international companies that have left the Russian market, as well as companies that continue to operate as usual without any changes. The period analyzed is from March 2022 till March 2024. The results of the study support the hypothesis that the size of a foreign company's subsidiary has a positive effect on the probability of its exit from the Russian market, which can be explained by the fact that large companies are much more visible in the market and, therefore, may be subject to greater regulatory and reputational pressure. In addition, there is statistically significant positive relationship found between a foreign company's belonging to such regions as Northern and Western Europe and its probability of exit from Russian market. The study also found statistical insignificance of most of the control variables identified in previous studies as significant in the context of doing international business in a normal global environment, which prompts to consider how much influence unexpected market turbulence has on a company's strategic decision-making.