The effect of ESG performance on the acquisition premium in an M&A-deal
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2024-07-12
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en
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This study investigates the effect of a target’s ESG-score on the acquisition premium. To determine this, the effect of the overall ESG-score is examined, the effect of the individual E-, S-, and G-score, the effect of the difference between the acquiror’s ESG-score and that of the target and lastly the difference in the effect for EU-based firms and non-EU-based firms. Prior literature found a positive significant effect of the ESG-score and the S-score on the acquisition premium. Moreover prior literature shows that high CSR firms experience more positive announcement period returns, suggesting that a negative difference in ESG-scores might lead to a higher acquisition premium. As the EU has stronger ESG-regulation than other regions of the world, it is expected that the effect the ESG-score has on the acquisition premium will be stronger for EU-based firms. However, the study does not find support for any of these expectations. A significant positive effect of the E-score is found. Additionally, the study finds that when the acquiror is not EU-based, a higher acquisition premium is paid when the ESG-score of the target is higher. In contrast the effect of the ESG-score on the acquisition premium is negative when the acquiror is EU-based.
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Faculteit der Managementwetenschappen