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Pay for Being Responsible: The Effect of Target Firm’s Corporate Social Responsibility on Cross-Border Acquisition Premiums

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  • Lu Qiao

    (Business School, University of International Business and Economics, Beijing 100029, China)

  • Jianfeng Wu

    (Business School, University of International Business and Economics, Beijing 100029, China)

Abstract

This study examines the effect of a target firm’s corporate social responsibility (CSR) on its cross-border acquisition premium. Building upon the resource-based view and the institutional theory, we argue that the target firm’s CSR positively affect the cross-border acquisition premium, while institutional distance, cultural distance, and the number of fellow acquisitions moderate the above relationship. Hypotheses are tested in a sample of 252 cross-border acquisitions between 1991 and 2016. Empirical findings show that an acquirer is more likely to pay a higher acquisition premium when acquiring a socially responsible target firm; furthermore, such an effect weakens as institutional distance, cultural distance, and the number of fellow acquisitions increase. This study extends existing research on the importance of CSR as a strategic asset and sheds new light on the role of CSR played in the setting of cross-border acquisitions.

Suggested Citation

  • Lu Qiao & Jianfeng Wu, 2019. "Pay for Being Responsible: The Effect of Target Firm’s Corporate Social Responsibility on Cross-Border Acquisition Premiums," Sustainability, MDPI, vol. 11(5), pages 1-21, March.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:5:p:1291-:d:210065
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    Cited by:

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    2. Ioannis Tampakoudis & Evgenia Anagnostopoulou, 2020. "The effect of mergers and acquisitions on environmental, social and governance performance and market value: Evidence from EU acquirers," Business Strategy and the Environment, Wiley Blackwell, vol. 29(5), pages 1865-1875, July.
    3. 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).

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