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Do financial markets care about SRI? Evidence from mergers and acquisitions

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  • Aktas, Nihat
  • de Bodt, Eric
  • Cousin, Jean-Gabriel
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    Abstract

    Mergers and acquisitions offer a framework for shedding new light on the stock market performance of socially responsible investments (SRI). We use Innovest's Intangible Value Assessment (IVA) ratings as a measure of firms' ability to cope with social and environmental risks. The IVA ratings allow us to uncover a positive relation between acquirer gains and the level of the target's social and environmental risk management practices. Our findings suggest that the stock market rewards the acquirer for making socially and environmentally responsible investments. We also document that the environmental and social performance of the acquirer increases following the acquisition of a SRI aware target. These results are consistent with acquirer learning from the target's SRI practices and experiences.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Banking & Finance.

    Volume (Year): 35 (2011)
    Issue (Month): 7 (July)
    Pages: 1753-1761

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    Handle: RePEc:eee:jbfina:v:35:y:2011:i:7:p:1753-1761

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    Web page: http://www.elsevier.com/locate/jbf

    Related research

    Keywords: Socially responsible investments Mergers and acquisitions Abnormal returns;

    References

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    Cited by:
    1. Deng, Xin & Kang, Jun-koo & Low, Buen Sin, 2013. "Corporate social responsibility and stakeholder value maximization: Evidence from mergers," Journal of Financial Economics, Elsevier, vol. 110(1), pages 87-109.
    2. Wu, Meng-Wen & Shen, Chung-Hua, 2013. "Corporate social responsibility in the banking industry: Motives and financial performance," Journal of Banking & Finance, Elsevier, vol. 37(9), pages 3529-3547.

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