Sustainability as a driver of Mergers and Acquisitions: Impact on Firm Development.
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2021-06-11
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en
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Abstract
This paper explores the individual effects of Environmental, Social and Governance (ESG) on Firm performance
and acquisition. I examine whether the acquisition of targets with higher ESG performance increases acquirers
own ESG and financial performance. For this study, I utilized a sample of 83 European Union mergers including
United Kingdom between 2004 and 2018, for which matching data on ESG performance of both target and
acquirer are available. The results shows that the environmental factor is the only factor that has a significant
and positive effect on the ESG performance of the acquiring firm. While there was no significant result on the
effect of target ESG performance on the financial performance of acquiring firm although the relationship is
negative. This paper went further ahead to provide causal evidence in understanding the motive for firms’
sustainable acquisitions using survey. The survey was conducted using Economics students at Radboud
University and Finance professionals in the Netherlands with a total of 68 respondents, of which 46 were
students. The results of the experiment show that firms view ESG as a business strategy and invest in it to build
their reputations and integrate it as part of their business practices.
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Faculteit der Managementwetenschappen