Does it pay off to ‘buy’ well? Empirical Evidence from an M&A Perspective

Mergers and acquisitions (M&As) offer a framework to shed a new light on whether corporate social responsibility (CSR) performance enhances corporate financial performance (CFP). Using ASSET4 data as a measurement of CSR performance in a sample of worldwide deals for the period 2004-2017, I find evidence that the environmental performance of target firms enhances acquirers’ shareholder wealth. No influence is found for different value implications in different institutional contexts. Additionally, shareholders reward (disvalue) acquirers even stronger if the target is outperforming (underperforming) the acquirer in environmental performance. These findings suggest that shareholders reward the acquirer for making environmental investments and support the stakeholder view, which indicates that fulfilling stakeholder interests can be combined with shareholder wealth creation.