The role of ESG in public mergers & acquisitions : Empirical evidence on the impact of ESG scores on M&A premium in European and North American stock markets
Pitkänen, Valtteri (2024-12-03)
The role of ESG in public mergers & acquisitions : Empirical evidence on the impact of ESG scores on M&A premium in European and North American stock markets
(03.12.2024)
Julkaisu on tekijänoikeussäännösten alainen. Teosta voi lukea ja tulostaa henkilökohtaista käyttöä varten. Käyttö kaupallisiin tarkoituksiin on kielletty.
suljettu
Julkaisun pysyvä osoite on:
https://urn.fi/URN:NBN:fi-fe202501102357
https://urn.fi/URN:NBN:fi-fe202501102357
Tiivistelmä
ESG considerations have become critical components in various aspects of finance and corporate operations, including mergers and acquisitions (M&A). Traditionally, M&A transactions have been driven by market expansion opportunities, financial synergies, cost efficiencies, and obtaining competitive advantages. However, as ESG practices gain prominence, their role in M&A has grown. Target companies with strong ESG capabilities are increasingly viewed as attractive by acquirers, potentially commanding higher premiums in M&A deals.
This thesis provides a comprehensive view on the role of ESG in M&A transactions. By utilizing a panel data of 1,240 transactions in European and North American stock markets, the empirical section of this study begins with a regression analysis examining the impact of ESG scores on M&A premium. The empirical analysis is then expanded into more profound level, by capturing potential differences across different geographical areas and industries. Moreover, the reasons for the relationship between ESG scores and M&A premium are evaluated by exploring ESG synergies with differences-in-differences analysis.
The results of the relationship between ESG scores and M&A premium indicate significant and positive relationship, in line with some of the previous research. The results across different geographical areas and industries offer mixed evidence, and they are not able to explain the differences consistently. However, since this is among the first studies aiming to capture the differences of ESG’s impact on M&A premium across different areas and industries, the results lay the foundation for future research on the topic.
The differences-in-differences results indicate that acquiring companies have been able to improve their ESG scores, if they acquire a target company with a higher ESG score. These results suggest that ESG synergies can be obtained via M&A.
This thesis provides a comprehensive view on the role of ESG in M&A transactions. By utilizing a panel data of 1,240 transactions in European and North American stock markets, the empirical section of this study begins with a regression analysis examining the impact of ESG scores on M&A premium. The empirical analysis is then expanded into more profound level, by capturing potential differences across different geographical areas and industries. Moreover, the reasons for the relationship between ESG scores and M&A premium are evaluated by exploring ESG synergies with differences-in-differences analysis.
The results of the relationship between ESG scores and M&A premium indicate significant and positive relationship, in line with some of the previous research. The results across different geographical areas and industries offer mixed evidence, and they are not able to explain the differences consistently. However, since this is among the first studies aiming to capture the differences of ESG’s impact on M&A premium across different areas and industries, the results lay the foundation for future research on the topic.
The differences-in-differences results indicate that acquiring companies have been able to improve their ESG scores, if they acquire a target company with a higher ESG score. These results suggest that ESG synergies can be obtained via M&A.