The relationship between acquirer's sustainability performance and M&A performance: Exploring the moderating role of social capital

Abstract

This study investigates the effect of acquirer’s sustainability performance on M&A performance from a stakeholder theory perspective. Moreover, this study pioneers the use of social capital as a moderating variable in examining the positive relationship between an acquirer’s sustainability performance and their M&A performance. Performing an event study approach using pooled cross-sectional data analysing 846 announced M&A deals initiated by United States acquirers between 2003 and 2022, we find no statistically significant positive effect of the sustainability performance of an acquirer on their short-term M&A performance. In addition, individual pillar scores of the sustainability performance of acquirers on M&A performance show similar results. Finally, we find no evidence of a moderating effect of the novel concept of social capital on the positive relationship between an acquirer’s sustainability performance and their short-term M&A performance. Our results are robust, even when taking endogeneity concerns into account.