Sanctions and inventories: Evidence from Russian energy firms

We examine how Russian energy firms respond to international sanctions imposed by Western countries and their allies. The primary aim of these sanctions is to prevent Russia from accessing global trade markets. Using the sample of 13,319 Russian firms from 1994 to 2022, we find that sanctioned Russian energy firms hold significantly higher inventory levels compared to non-sanctioned firms. Sanctions have heterogeneous impacts across different firm characteristics. Large firms hold more inventory after being sanctioned, while highly leveraged firms significantly reduce their inventory levels. We also find that corporate inventory turnover is not significantly impacted, likely because sanctioned energy firms cannot promptly sell their products in response to the sanctions.