Abstract
Environmental, social, and governance (ESG) expectations from stakeholders affect firm decisions. We investigate ESG acquisitions with a focus on how a pre-deal ESG gap influences how acquirers' structure ESG deals strategically and their outcomes in terms of combined ESG performance post-acquisition. Drawing on relative capabilities and signaling research, with an international sample of 340 ESG deals, we find that acquirers with a higher ESG score relative to the target (i.e., low-ESG acquisitions) are more likely to target smaller firms, use cash as method of payment, and complete deals faster. We also show that low-ESG deals lead to an average increase in the combined entity's ESG performance in the 3 years after the acquisition, thus indicating ESG corrective acquisitions as an opportunity for ESG capabilities transfer and improvement. However, effects are influenced by an acquirer's embeddedness in the European institutional context where ESG stakeholder expectations are more developed.
| Original language | English |
|---|---|
| Pages (from-to) | 6010-6028 |
| Number of pages | 19 |
| Journal | Business Strategy and the Environment |
| Volume | 33 |
| Issue number | 6 |
| Early online date | 12 May 2024 |
| DOIs | |
| Publication status | E-pub ahead of print - 12 May 2024 |
Bibliographical note
Publisher Copyright:© 2024 ERP Environment and John Wiley & Sons Ltd.
Research Groups and Themes
- MGMT Strategy International Management and Business and Entrepreneurship
- SIMBE
Access to Document
- Full-text PDF (accepted manuscript)
This is the accepted author manuscript (AAM) of the article which has been made Open Access under the University of Bristol's Scholarly Works Policy. The final published version (Version of Record) can be found on the publisher's website. The copyright of any third-party content, such as images, remains with the copyright holder.