IDEAS home Printed from https://ideas.repec.org/p/hal/journl/halshs-05328960.html

LBO and firm ESG commitment

Author

Listed:
  • Fidèle Shukuru Balume

    (MAGELLAN - Laboratoire de Recherche Magellan - UJML - Université Jean Moulin - Lyon 3 - Université de Lyon - Institut d'Administration des Entreprises (IAE) - Lyon)

  • Jean-François Gajewski

    (MAGELLAN - Laboratoire de Recherche Magellan - UJML - Université Jean Moulin - Lyon 3 - Université de Lyon - Institut d'Administration des Entreprises (IAE) - Lyon)

  • Tao-Hsien Dolly King

    (UNC - University of North Carolina [Charlotte] - UNC - University of North Carolina System)

Abstract

This study analyzes the impact of leveraged buyouts (LBOs) on firms' environmental, social and governance (ESG) commitments. Design/methodology/approach This study uses a comprehensive sample of LBO target firms and their comparable firms to empirically examine the link between LBO and ESG policy using a sample of US firms from 2010 to 2023. Findings Contrary to the hypothesis that companies under the LBO have higher ESG levels, our results reveal that these companies exhibit lower ESG scores than their comparable firms immediately prior to the LBO deal. Looking at the post-deal period, we find a significant decrease in the ESG commitment of the target firms. Originality/value The post-deal reduction in ESG commitment can be attributed to greater financial constraints. The heightened financial pressure stemming from the use of substantial debt to finance the LBO leads companies to prioritize short-term profitability over long-term sustainable investments. These findings underline the importance of close monitoring of ESG practices in LBO transactions by investors, regulators and other stakeholders to promote sustainable and responsible corporate management in the long term.

Suggested Citation

  • Fidèle Shukuru Balume & Jean-François Gajewski & Tao-Hsien Dolly King, 2025. "LBO and firm ESG commitment," Post-Print halshs-05328960, HAL.
    • Handle: RePEc:hal:journl:halshs-05328960
    DOI: 10.1108/MF-08-2024-0647
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a
    for a similarly titled item that would be available.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:halshs-05328960. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.