| Abstract [eng] |
The geopolitical situation in the modern business environment is gaining more and more importance. Financial stability is important for the successful development of businesses but the ongoing geopolitical turmoil is fuelling uncertainty, disrupting the supply chain, which affects the income and costs of companies. Employees of firms in difficulty also suffer because due to falling production volumes, they are deprived of guarantees. In the first part it was noted that the scientific literature focuses on the impact of the stock market but does not sufficiently study the effect of the geopolitical situation on the financial indicators of companies. Based on this, a problem has been raised to evaluate the impact of geopolitical risks on changes in financial performance indicators and market value of companies. The second part states that regressive analysis is used in this type of research and the impact of the geopolitical situation is assessed by an index of geopolitical risks. Most often, the impact is assessed on the return of shares, the profitability of assets, financial leverage and other indicators corresponding to the purpose of the study. In the third part, a model is formed that allows to assess the impact of geopolitical risks on the selected dependent variable. In the fourth part, a study is carried out assessing 30 companies listed on the Baltic market in the period 2015 – 2022 using quarterly data. The impact of geopolitical risks is assessed on five variables: stock returns, financial leverage, asset profitability, market value and EBITDA. The conducted study assessed not only the overall impact of geopolitical risks on financial results, but separately assessed the impact of the Russian – Ukrainian war, which occurred in 2022 Q1. The final results show that geopolitical risks have a negative impact on the return of shares both in the event of a specific geopolitical event and in the general context. For the other indicators assessed geopolitical risks only have a negative impact when a geopolitical event occurs but no significant impact has been identified in the overall context. The impact of geopolitical risks has not been determined solely on the profitability of assets. The analysis of companies by country showed that Lithuanian companies were more severely affected by geopolitical risks than Estonian or Latvian companies. This suggests that companies closer to the geopolitical event react more strongly than companies that are further away. Based on the results of the research obtained investors seeking to protect themselves from a decline in stock returns should take a good look at geopolitical risks because it negatively affects the stock market. At the event of a geopolitical event company managers can expect the decrease in financial results but the market tends to stabilize and in the long term geopolitical risks do not have a significant impact on the financial indicators and market value of companies. |
