ABSTRACT Purpose Against the backdrop of the Russia-Ukraine conflict and ensuing industrial turmoil as well as the pressure of stakeholder sentiments, numerous U.S-based multinational B2B firms announced about their intent to withdraw from the Russian market. This study aims to probe the veracity of this form of corporate communication, exploring the corporate honesty effect by juxtaposing the stated withdrawal intentions against the actual scale of divestment. Methodology/approach We identify 241 cases of response to the Russia-Ukraine conflict pertaining to U.S-based multinational B2B corporations. This includes 34 cases of no withdrawal (i.e., no communication) and 207 cases of announcements about the firm’s intent to withdraw from Russia. For these cases, we calculate the actual scale of withdrawal (Actual Divestment Index) based on the data from Federal Tax Service of Russia and the Central Bank of the Russian Federation. Considering Actual Divestment Index as a fractional measure, we conduct fractional logit regression analysis, where the effect of the withdrawal communication on Actual Divestment Index is interpreted as the corporate honesty effect. Findings Controlling for variables such as firm size, leverage, return on assets, institutional ownership, entry mode, and industry, the analysis reveals that the scope of intended withdrawal – reflected in the stages of no action, non-essential pullout, suspension, partial core, and full core withdrawal – is positively associated with the observed level of divestment. The findings further show that firms with larger corporate resources, higher profitability, and deeper local market exposure exhibit a greater level of corporate honesty. Research implications This study builds on the MFHB framework (Cooper et al., 2023) that differentiates several distinct dimensions of corporate honesty. Our research applies these dimensions to formulate an operational definition of corporate honesty which emphasizes the fidelity to the firm’s communicated intent, situationally activated in response to external pressures and emergent socio-political sentiments, in the context of established domestic/international business relationships. Also, we contribute to the current body of knowledge on corporate honesty by introducing a method of measuring the corporate honesty effect. Practical implications Marketing managers of multinational B2B firms must endeavor to maintain the stakeholder perceptions of corporate legitimacy by constantly monitoring the level of corporate honesty effect, specifically during the time of war-induced disruptions and turmoil in B2B markets. Managers of B2B firms with larger resources, better profitability, and deeper market exposure can leverage their advantageous position to further highlight and promote their actual performance in this aspect to assuage the concerns and negative sentiments of stakeholders. Originality/value/contribution This research contributes to theories of corporate honesty by contextualizing the concept of corporate honesty within the framework of communication-action congruence. This is done in relation to the strategic divestment communications and actions undertaken by B2B multinational firms in a market embroiled in moral turmoil during a geopolitical conflict. Our alternative operationalization of corporate honesty facilitates a quantifiable assessment of this construct, offering an alternative methodology to evaluate the integrity of corporate communications vis-à-vis actual organizational action in crisis contexts. Our findings about the boundary conditions of the corporate honesty effect contributes to a nuanced understanding of the phenomenon within the domain of sociopolitical corporate activism, ethical business practices, and international market dynamics.
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