Enhancing environmental sustainability through corporate governance: the merger and acquisition perspective

Abstract

Background Environmental sustainability may be perceived as conflicting with economic development. Economic activities such as mergers and acquisitions can contribute to resource allocation optimization, where corporate governance plays an important role in advancing environmental sustainability. Our study broadens the investigation of whether mergers and acquisitions are helpful for sustainable environmental development. We attempt to reveal the mechanism by which mergers and acquisitions affect sustainable development: namely, through corporate governance. Results By employing panel data for Chinese listed companies, we reveal that mergers and acquisitions have a significant positive influence on environmental sustainability. In particular, the study documents a mediating effect of corporate governance. We argue that mergers and acquisitions can trigger company reorganizations and thus optimize firm structure, resulting in better corporate governance. This effect, in turn, can enhance company management in several aspects, including sustainable environmental development. Therefore, we conclude that the government can improve corporate governance by promoting board reorganizations via mergers and acquisitions, leading to better environmental sustainability. Conclusions This paper can inspire future research avenues by shedding light on how economic development and environment sustainability can be harmonized through better corporate governance. It can also deliver research implications on corporate governance studies through mergers and acquisitions.

Energy M&A Market in the Baltic States Analyzed through the Lens of Sustainable Development

“…We believe that use of traditional SWOT guidance and building on strengths, eliminating weaknesses, further exploiting of opportunities, and mitigating the effects of threats may add value to practitioners and further researchers. Similarly to Zheng et al [50], we do not see sustainability conflicting with economic development. In contrast, we perceive sustainability potentially being improved by M&A activities as they may contribute to resource allocation optimization and advancing environmental sustainability.…”

“…The findings of Manocha and Srai [49] suggest that product design and technology selection factors represent sources of M&A value creation when exploring an innovation for a sustainable change management. Zheng et al [50] consider opportunities arising during M&A integration from corporate reorganizations, and optimization of firm structure which subsequently leads to improved corporate governance. Caizza et al [52] foresee cross-border M&A as providing various opportunities and benefits, such as expeditious entry into new markets by gaining local knowledge, supplier networks, government relationships, and customers coming from the target firm.…”

Impact of Environmental Regulation on Corporate Green Technological Innovation: The Moderating Role of Corporate Governance and Environmental Information Disclosure

“…CGL is the primary sustainable development mechanism for companies, and it has been shown to improve environmental quality [18]. Healthy corporate governance not only aims to maximize corporate value but also preserves social and environmental interests [73]. In recent years, corporate governance has been increasingly applied to regulate corporate activities, including their social and environmental impact [74].…”

Application of Machine Learning Models for Predictions on Cross-Border Merger and Acquisition Decisions with ESG Characteristics from an Ecosystem and Sustainable Development Perspective

“…On one hand, the firm has the motivation to apply the idea of ESG/CSR investment to improve the corporate governance level by the mergers. Corporate governance plays an important role in advancing environmental sustainability [33]. Sustainable development requires the firm to mitigate agency problems.…”

“…Meanwhile, one way to improve the corporate governance is through mergers and acquisitions. M&A triggers company reorganization and optimizes firm structure, resulting in better corporate governance, ultimately leading to better environmental sustainability [33]. Furthermore, green M&A can increase the environment protection investment by improving corporate reputation and environmental awareness, enhancing financing ability and subsidies [42].…”