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M&A activity as a driver for better ESG performance

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  • Barros, Victor
  • Verga Matos, Pedro
  • Miranda Sarmento, Joaquim
  • Rino Vieira, Pedro

Abstract

This paper examines whether mergers and acquisitions (M&A) operations impact firms’ performances on triple ESG pillars (environment, social, and governance) using a large panel covering 41 countries and 12 economic sectors between 2002 and 2020. We provide evidence that M&A deals have a positive impact on the ESG score of firms. However, this improvement in the ESG score is not attained immediately, and there is no impact on the ESG score in the year in which the deal is agreed upon. However, an M&A deal appears to be significant in increasing ESG performance when the year following the transaction is considered on its own. Similar results are obtained when considering each of the three pillars – environmental, social, and governance. This paper contributes to both the M&A and sustainability literature by exploring a new topic that addresses the relationship between the two. Policy implications for authorities, regulators, managers, and other stakeholders are also outlined.

Suggested Citation

  • Barros, Victor & Verga Matos, Pedro & Miranda Sarmento, Joaquim & Rino Vieira, Pedro, 2022. "M&A activity as a driver for better ESG performance," Technological Forecasting and Social Change, Elsevier, vol. 175(C).
    • Handle: RePEc:eee:tefoso:v:175:y:2022:i:c:s0040162521007691
    DOI: 10.1016/j.techfore.2021.121338
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    Cited by:

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    3. Alan Kai Ming Au & Yi-Fan Yang & Huan Wang & Rui-Hong Chen & Leven J. Zheng, 2023. "Mapping the Landscape of ESG Strategies: A Bibliometric Review and Recommendations for Future Research," Sustainability, MDPI, vol. 15(24), pages 1-26, December.
    4. Jorge Antunes & Peter Wanke & Thiago Fonseca & Yong Tan, 2023. "Do ESG Risk Scores Influence Financial Distress? Evidence from a Dynamic NDEA Approach," Sustainability, MDPI, vol. 15(9), pages 1-32, May.
    5. Liyuan Meng & Yuchen Zhang, 2023. "Impact of Tax Administration on ESG Performance—A Quasi-Natural Experiment Based on China’s Golden Tax Project III," Sustainability, MDPI, vol. 15(14), pages 1-23, July.
    6. Karolis Andriuškevičius & Dalia Štreimikienė, 2022. "Energy M&A Market in the Baltic States Analyzed through the Lens of Sustainable Development," Energies, MDPI, vol. 15(21), pages 1-21, October.
    7. Lipeng Sun & Nur Ashikin Mohd Saat, 2023. "How Does Intelligent Manufacturing Affect the ESG Performance of Manufacturing Firms? Evidence from China," Sustainability, MDPI, vol. 15(4), pages 1-20, February.
    8. Asif, Muhammad & Searcy, Cory & Castka, Pavel, 2023. "ESG and Industry 5.0: The role of technologies in enhancing ESG disclosure," Technological Forecasting and Social Change, Elsevier, vol. 195(C).

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    More about this item

    Keywords

    Mergers; Acquisitions; Sustainability; Ratings; ESG;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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