The effect of CSR on M&A Performance

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Issue Date
2019-04-01
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en
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Abstract
Previous empirical evidence provides mixed results on the relationship between corporate social responsibility (CSR) and corporate financial performance (CFP). This thesis revisits this relation by testing two opposing views on CSR, namely the stakeholder value maximization view and the shareholder expense view. Using a large sample of European mergers, this thesis examines whether CSR creates or destroys value for acquiring firms’ shareholders. This thesis finds that acquiring companies with high CSR have lower merger announcement returns than acquiring companies with low CSR. This suggests that CSR is a source of value-destruction and that the market values CSR investments lower than its costs. This supports the shareholder expense view. In addition, this thesis finds that when distinguishing between three different CSR dimensions (environmental, social and corporate governance) the social dimension is the most important determinant of value-destruction in mergers. Keywords: Corporate social responsibility (CSR), Mergers and acquisitions, Announcement returns, Stakeholder theory.
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Faculteit der Managementwetenschappen