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Does corporate ESG create value? New evidence from M&As in China

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  • Zheng, Zhigang
  • Li, Jiarong
  • Ren, Xingzi
  • Guo, Jie Michael

Abstract

Using a large sample of Chinese companies' domestic M&A, this study provides new evidence on the financial payback of corporate ESG and its dynamics. We find that acquirers' ESG rating is positively correlated to post-M&A performance and deal completion likelihood. Additionally, we find the relationship between acquirer's ESG dynamic and post-M&A performance is contingent on the firm's previous ESG standards. Overall, these findings are in line with the instrumental stakeholders' view that high ESG performance could earn support from stakeholders for post-M&A synergy creation and emphasize the asymmetric marginal outcome of firms' ESG efforts as a result of diminishing marginal utility of stakeholders.

Suggested Citation

  • Zheng, Zhigang & Li, Jiarong & Ren, Xingzi & Guo, Jie Michael, 2023. "Does corporate ESG create value? New evidence from M&As in China," Pacific-Basin Finance Journal, Elsevier, vol. 77(C).
    • Handle: RePEc:eee:pacfin:v:77:y:2023:i:c:s0927538x22002116
    DOI: 10.1016/j.pacfin.2022.101916
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    More about this item

    Keywords

    ESG; Merger and acquisition; Firm value; Stakeholder utility;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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