IDEAS home Printed from https://ideas.repec.org/a/bla/bstrat/v33y2024i2p858-881.html
   My bibliography  Save this article

Stemming the tide: Does climate risk affect M&A performance?

Author

Listed:
  • Suman Lodh
  • Nitin Deshmukh
  • Alireza Rohani

Abstract

We examine the effect of climate change risks (CCR) on firms' decision of engaging in mergers and acquisitions (M&A) and M&A performance. In this study we use the responses by firms on ‘climate change‐related risks and opportunities’ of the Carbon Disclosure Project (CDP) survey and 1372 deals of US listed firms during 2010–2020. Consistent with risk vulnerability theory, our evidence indicates that firms with higher CCR have a lower probability of engaging in M&As. After controlling for possible endogeneity, our results also indicate that if acquirers with higher climate change risks choose to engage in M&A, it significantly reduces the announcement returns. These findings suggest that extant measures of climate change risks should be rethought when evaluating M&A efficiency. More broadly, our paper provides causal evidence that managers need to integrate CCR into their formal risk management systems to avoid unsuccessful M&As.

Suggested Citation

  • Suman Lodh & Nitin Deshmukh & Alireza Rohani, 2024. "Stemming the tide: Does climate risk affect M&A performance?," Business Strategy and the Environment, Wiley Blackwell, vol. 33(2), pages 858-881, February.
    • Handle: RePEc:bla:bstrat:v:33:y:2024:i:2:p:858-881
    DOI: 10.1002/bse.3518
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/bse.3518
    Download Restriction: no
    File URL: https://libkey.io/10.1002/bse.3518?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:bstrat:v:33:y:2024:i:2:p:858-881. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1099-0836 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.