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The Impact of Sanctions on the Financial Performance and Creditworthiness of Russian Non-Financial Companies
The study conducts an examination of the effects of sanctions imposed on Russia, focusing on profitability and creditworthiness of large non-financial enterprises as measured by return on assets (ROA) and return on capital employed (ROCE). The analysis encompasses the period from 2015 to 2022 and includes a sample of 58 Russian corporations. The sanctions index developed for this study reveals a moderate negative impact on the creditworthiness of all companies, attributable to the closure of the international capital market and an increase in funding costs. The analysis did not confirm a decline in ROA and ROCE; however, findings suggest some weakening in ROCE among companies subjected to intense sanctions pressure. Regarding firms operating within resource industries, the impact of sanctions on profitability displayed a mixed pattern. Mild sanctions pressure was found to adversely affect both ROA and ROCE, whereas significant sanctions pressure yielded positive results, likely due to high commodity price environment and government support. The implementation of sustainable development strategies did not mitigate the adverse effects of sanctions pressure. These results provide insights for predicting the consequences of sanctions on non-financial enterprises and for formulating anti-sanction strategies, including those that involve government support mechanisms.