The effect of ESG ratings on M&A performance
Keywords
Loading...
Authors
Issue Date
2023-07-07
Language
en
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
ESG performance has become increasingly important over the last few years and its importance continues to grow. As investor decisions rely increasingly more on ESG performance, this study investigates the relation between ESG performance and cumulative abnormal returns surrounding the announcement of a merger or acquisition. Using an event study methodology with three different event windows: a five-day (-2, +2) window, a three-day (-1, +1) window, and a two-day (0, +1) window and a sample of 2,265 M&A deals over the years 2002 – 2021, an empirical analysis is performed. This study finds a negative relation between ESG performance which leads to believe that investing in ESG is less beneficent for a company that wants to actively participate in mergers and acquisitions than not investing in ESG, as significance to a 1% level is observed in event window (-2, +2) and in event window (0, +1), whereas a significance to a 5% level is found in event window (-1, +1). Furthermore, a negative relation between the environmental and governance pillar and cumulative abnormal returns in each event window, and a positive relation between the social pillar and cumulative abnormal returns are observed.
Description
Citation
Supervisor
Faculty
Faculteit der Managementwetenschappen