Do financial markets care about SRI? Evidence from mergers and acquisitions
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.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73, pages 110-110.
- Sara B. Moeller & Frederik P. Schlingemann & Rene M. Stulz, 2004.
"Wealth Destruction on a Massive Scale? A Study of Acquiring-Firm Returns in the Recent Merger Wave,"
NBER Working Papers
10200, National Bureau of Economic Research, Inc.
- Sara B. Moeller & Frederik P. Schlingemann & René M. Stulz, 2005. "Wealth Destruction on a Massive Scale? A Study of Acquiring-Firm Returns in the Recent Merger Wave," Journal of Finance, American Finance Association, vol. 60(2), pages 757-782, 04.
- Fisher-Vanden, Karen & Thorburn, Karin S., 2011.
"Voluntary corporate environmental initiatives and shareholder wealth,"
Journal of Environmental Economics and Management,
Elsevier, vol. 62(3), pages 430-445.
- Fisher-Vanden, Karen & Thorburn, Karin S, 2008. "Voluntary Corporate Environmental Initiatives and Shareholder Wealth," CEPR Discussion Papers 6698, C.E.P.R. Discussion Papers.
- Randall Morck & Andrel Shleifer & Robert W. Vishny, 1988.
"Alternative Mechanisms for Corporate Control,"
University of Chicago - George G. Stigler Center for Study of Economy and State
52, Chicago - Center for Study of Economy and State.
- Mulherin, J. Harold & Boone, Audra L., 2000. "Comparing acquisitions and divestitures," Journal of Corporate Finance, Elsevier, vol. 6(2), pages 117-139, July.
- Franks, Julian & Mayer, Colin, 1996. "Hostile takeovers and the correction of managerial failure," Journal of Financial Economics, Elsevier, vol. 40(1), pages 163-181, January.
- Renneboog, Luc & Ter Horst, Jenke & Zhang, Chendi, 2008. "The price of ethics and stakeholder governance: The performance of socially responsible mutual funds," Journal of Corporate Finance, Elsevier, vol. 14(3), pages 302-322, June.
- Mark L. Mitchell & Kenneth Lehn, 1990. "Do Bad Bidders Become Good Targets?," Journal of Applied Corporate Finance, Morgan Stanley, vol. 3(2), pages 60-69.
- G. William Schwert, 1999.
"Hostility in Takeovers: In the Eyes of the Beholder?,"
NBER Working Papers
7085, National Bureau of Economic Research, Inc.
- G. William Schwert, 2000. "Hostility in Takeovers: In the Eyes of the Beholder?," Journal of Finance, American Finance Association, vol. 55(6), pages 2599-2640, December.
- Gregor Andrade & Mark Mitchell & Erik Stafford, 2001. "New Evidence and Perspectives on Mergers," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 103-120, Spring.
- Moeller, Sara B. & Schlingemann, Frederik P. & Stulz, Rene M., 2004. "Firm size and the gains from acquisitions," Journal of Financial Economics, Elsevier, vol. 73(2), pages 201-228, August.
- Boehmer, Ekkehart & Masumeci, Jim & Poulsen, Annette B., 1991. "Event-study methodology under conditions of event-induced variance," Journal of Financial Economics, Elsevier, vol. 30(2), pages 253-272, December.
- Fama, Eugene F, et al, 1969. "The Adjustment of Stock Prices to New Information," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 10(1), pages 1-21, February.
- Campbell, Cynthia J. & Cowan, Arnold R. & Salotti, Valentina, 2010. "Multi-country event-study methods," Journal of Banking & Finance, Elsevier, vol. 34(12), pages 3078-3090, December.
- Brown, Stephen J. & Warner, Jerold B., 1985. "Using daily stock returns : The case of event studies," Journal of Financial Economics, Elsevier, vol. 14(1), pages 3-31, March.
- Jensen, Michael C. & Ruback, Richard S., 1983. "The market for corporate control : The scientific evidence," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 5-50, April.
- Mitchell, Mark L & Lehn, Kenneth, 1990. "Do Bad Bidders Become Good Targets?," Journal of Political Economy, University of Chicago Press, vol. 98(2), pages 372-398, April.
- Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73, pages 351-351.
- Heckman, James J, 1979.
"Sample Selection Bias as a Specification Error,"
Econometric Society, vol. 47(1), pages 153-161, January.
- Bauer, Rob & Koedijk, Kees & Otten, Roger, 2005. "International evidence on ethical mutual fund performance and investment style," Journal of Banking & Finance, Elsevier, vol. 29(7), pages 1751-1767, July.
- Eckbo, B. Espen & Thorburn, Karin S., 2000. "Gains to Bidder Firms Revisited: Domestic and Foreign Acquisitions in Canada," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 35(01), pages 1-25, March.
- Cong Wang & Fei Xie, 2009. "Corporate Governance Transfer and Synergistic Gains from Mergers and Acquisitions," Review of Financial Studies, Society for Financial Studies, vol. 22(2), pages 829-858, February.
- Aktas, Nihat & de Bodt, Eric & Roll, Richard, 2004. "Market Response to European Regulation of Business Combinations," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 39(04), pages 731-757, December.
When requesting a correction, please mention this item's handle: RePEc:eee:jbfina:v:35:y:2011:i:7:p:1753-1761. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)
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.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.