Recalibration of priorities: Investor preference and Russia-Ukraine conflict

Abstract

This study examines the role of the Russia-Ukraine conflict in influencing the investor preference for energy, aerospace & defense, and ESG (i.e., environmental, social, and governance) investments, using Diebold and Yilmaz’s (2012) return spillover effects from April 2019 to May 2022. Our findings report that energy and the aerospace & defense sectors become the net receivers of return spillover effects from ESG investments after February 2022, suggesting that the Russian invasion of Ukraine led to a recalibration of investor priorities. Investor preference for energy and the aerospace & defense sectors has increased in the wake of their growing sustainability role.