The impact of divergent energy dependence on energy stock market reactions: An event study of Finland, Spain and Lithuania during the Russia Ukraine war

Abstract

This thesis examines how major geopolitical events related to the Russia-Ukraine war affected energy stock markets in countries with varying levels of dependency on Russian energy: Finland, Spain, and Lithuania. Applying an event study methodology, the initial Russian invasion of Ukraine as well as three subsequent sanctions packages were analyzed to assess abnormal stock returns. The results indicate that only the initial invasion produced a statistically significant market reaction, particularly in Spain, while other events produced limited or insignificant effects. These results are partially explained by energy dependence, among other structural and firm-specific factors, and highlight the value of diversification for policymakers and investors alike. The thesis contributes to the literature on market efficiency, energy dependence, and crisis-driven investor behavior, offering insights for international business strategy and financial risk management.