The effect of environmental, social and governance score on operating performance after mergers and acquisitions

Teti, Emanuele; Spiga, Lorenzo

doi:10.1002/bse.3293

Cited by 7 publications

(5 citation statements)

References 38 publications

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“…A study of 796 transactions taking place between 2011 and 2018 found that acquirers with a high ESG rating (above the median Refinitiv ESG score) achieved a significant improvement in postdeal operating performance, whereas this was not the case for acquirers with a low rating (below the median Refinitiv ESG score). [13] Another study, examining 1,556 US mergers from 1992 to 2007, found that deals completed by acquirers with high ESG scores took less time to complete, improved post-deal operating performance, and increased the long-term stock returns of these acquirers versus those with low ESG scores. [14] Risks of ignoring ESG in M&A…”

Section: Performance Benefitsmentioning

confidence: 99%

Incorporating ESG across the M&A process

Galpin,

de Vibe

2024

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Purpose Aspects of ESG have become key considerations during many M&A transactions. This ranges from the type of assets a firm purchases, to evaluating the management practices of target firms, to incorporating ESG assessments into due diligence checklists and valuation models, to including specific ESG provisions in the sale and purchase agreement (SPA). Companies are increasingly concluding that a more robust focus on ESG in deal-making allows for greater value to be captured. This article identifies how companies can go about incorporating ESG throughout the deal process, from pre-deal analysis through post-transaction integration. A case example is provided. Design/methodology/approach This article provides key actions firms can take to incorporate ESG throughout the deal process, from pre-deal analysis through post-transaction integration. A case example from a large state-owned Norwegian utility is provided. Findings Various components of ESG have rapidly become key considerations in transactions. Firms that incorporate ESG across their M&A process, both pre- and post-deal can reap significant benefits. While firms that ignore ESG during M&A not only miss the upside potential, but also risk making damaging and costly deal mistakes. Practical implications M&A practitioners will find this article particularly useful, as many firms struggle with how to effectively include ESG in their transactions. This article provides M&A practitioners with key actions they can take to incorporate ESG throughout the deal process, from pre-deal analysis through post-transaction integration. A case example from a large state-owned Norwegian utility is provided. Originality/value The body of literature about M&A transactions is extensive, as is the recent writing about the importance of ESG to firms' costs, revenue, and societal impact. This article brings these two aspects together by providing M&A practitioners with key actions they can take to incorporate ESG throughout the deal process, from pre-deal analysis through post-transaction integration.

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Section: Performance Benefitsmentioning

confidence: 99%

Incorporating ESG across the M&A process

Galpin,

de Vibe

2024

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“…Enterprise ESG performance is closely linked to their sustainable development and competitiveness. Technology M&As, by introducing advanced environmental technologies, social responsibility practices, and effective corporate governance mechanisms, can enhance an enterprise's ESG performance [55]. Such improvements in ESG performance help to boost the company's image among investors and consumers, consequently increasing their market value.…”

Section: Research Hypothesesmentioning

confidence: 99%

The Impact of Technology Mergers and Acquisitions on Enterprise Sustainable Competitiveness

2024

Sustainability

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In the context of global competition, enterprises are increasingly adopting technology mergers and acquisitions (M&As) as a strategic approach to enhance their sustainable competitiveness. This study investigates the impact of technology M&As on the sustainable competitiveness of enterprises, focusing on Chinese A-share listed companies from 2007 to 2021. Employing a staggered difference-in-difference (DID) model for empirical analysis, the findings reveal that technology M&As significantly boost the sustainable competitiveness of enterprises by 6.2% compared to non-technology M&A firms. Moreover, the study employs a mediation effect model to demonstrate that technology M&As contribute to improved enterprise productivity levels and market power. Heterogeneity analysis further indicates that the positive effects are more pronounced in firms with a strong ESG performance and those with lower levels of digital development. The study offers valuable insights for corporate strategic planning and policy-making, emphasizing the role of technology M&As in fostering enterprise sustainability and competitiveness.

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“…Further evidence emerged considering a specific event during a company's lifetime: an M&A operation. Teti and Spiga (2022) analysed how the CSP performance of the acquirer firm, measured with the ESG rating, is related to postmerger operating performance; they found a sort of U‐shaped relationship because, in the case of acquirers with very high ESG ratings, these companies might have to bear higher costs during integration with the target, hence reducing the value created by the operation.…”

Section: Thematic and Content Analysismentioning

confidence: 99%

Anatomy of the chimera: Environmental, Social, and Governance ratings beyond the myth

Lucarelli,

Severini

2024

Bus Strat Env

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Environmental, Social, and Governance (ESG) ratings were developed to account for the multidimensional nature of the sustainability of firms. Research on ESG ratings suggests that working towards sustainability means engaging in a utopian effort, as in the chimera myth. We developed a conceptual framework of corporate activities that guides a systematic literature review based on 79 papers. Our analysis confirms that ESG ratings remain a black box, explored mainly from a purely monetary perspective and with contradictions on value created for companies and collective well‐being. Therefore, we deduce that research is still “chasing a chimera,” being this incomplete knowledge due to divergences in (1) theories, (2) regulations, (3) geographic and (4) corporate culture, (5) constructs/metrics, and (6) corporate attitude towards disclosure. Consequently, we identify research gaps and avenues for future research to foster corporations' responsible behaviours and socially responsible investing.

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The effect of environmental, social and governance score on operating performance after mergers and acquisitions

Cited by 7 publications

References 38 publications

Incorporating ESG across the M&A process

Incorporating ESG across the M&A process

The Impact of Technology Mergers and Acquisitions on Enterprise Sustainable Competitiveness

Anatomy of the chimera: Environmental, Social, and Governance ratings beyond the myth

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