Corporate Social Responsibility and Firm Value: Evidence from the Global M&A Market
Loading...
URL
Journal Title
Journal ISSN
Volume Title
School of Business |
Bachelor's thesis
Unless otherwise stated, all rights belong to the author. You may download, display and print this publication for Your own personal use. Commercial use is prohibited.
Authors
Date
2022
Department
Major/Subject
Mcode
Degree programme
Rahoitus
Language
fi
Pages
24
Series
Abstract
This paper analyzes the relationship between firm value and Corporate Social Responsibility (CSR). By investigating the effect of target companies’ Environmental, Social and Governance (ESG) metrics on the bids they attract in the global merger & acquisition (M&A) market from 2017 to 2022, this paper reveals the following: (i) A target’s overall CSR profile as implied by the Refinitiv Combined ESG Score fails to produce a significant effect on the acquisition premium, partly because the environmental and social dimensions of CSR are oppositely valued by acquirors. (ii) Ceteris paribus, acquirors are inclined to pay more for a company with superior environmental responsibility, whereas socially responsible targets are acquired for less than their less socially responsible peers. (iii) The dimensions of CSR with significant positive valuation effects are measures targeted at reducing emissions and securing the rights of all shareholders, whereas CSR dimensions with significant negative effects are measures targeting the firm’s social community, workforce, and product social responsibility. For corporate managers, these findings suggest that refraining from social measures and investing into environmental measures may increase the value of their firm.Description
Thesis advisor
Lof, MatthijsKeywords
Corporate Social Responsibility, Sustainable Finance, Mergers and Acquisitions, M&A Valuation