Valuation Effects of Corporate Strategic Transactions in the Cleantech Industry

This paper investigates capital market reactions to announcements of corporate strategic transactions in the cleantech industry. Using the event study method in a multi-country setting, we exploit a dataset of 328 hand-collected announcements of mergers and acquisitions, joint ventures and asset disposals that took place between 2001 and 2011. We provide strong evidence of significant wealth gains from cleantech deals. On average, cleantech companies earn significantly higher abnormal returns than non-cleantech companies, which attests to beneficial idiosyncrasies of the cleantech industry. These high premiums are likely driven by government interventions which are believed to be a necessary pre-condition for clean technology to develop. Alternatively, the premiums are commanded by the acquisition of cutting-edge environmental innovations and the positive credibility spillover inherent in cleantech deals.