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Can ESG mitigate the diversification discount in cross-border M&A?
- Source :
- Borsa Istanbul Review, Vol 22, Iss 3, Pp 607-615 (2022)
- Publication Year :
- 2022
- Publisher :
- Elsevier, 2022.
-
Abstract
- This study seeks to understand how environmental, social, and corporate governance (ESG) affects business performance and the diversification effect of cross-border mergers and acquisitions (M&A) by examining 129 events on cross-border M&A in the Korean Stock Price Index (KOSPI) market representing emerging capital markets between 2012 and 2018 in 38 target countries. The findings indicate that better ESG engagement has a positive effect on the business performance of cross-border M&A, supporting stakeholder theory and confirming that ESG can serve as a strategy for boosting business efficiency in cross-border M&A. The findings also confirm that diversification in cross-border M&A leads to a diversification discount on business performance, negatively affecting acquiring firms, but that ESG engagement can mitigate the diversification discount as a friendly channel. The study's main contribution is providing empirical evidence that ESG can serve as a friendly channel through which to address the diversification discount issue.
Details
- Language :
- English
- ISSN :
- 22148450
- Volume :
- 22
- Issue :
- 3
- Database :
- Directory of Open Access Journals
- Journal :
- Borsa Istanbul Review
- Publication Type :
- Academic Journal
- Accession number :
- edsdoj.00cd55e01814164bf2b53e64253ccf4
- Document Type :
- article
- Full Text :
- https://doi.org/10.1016/j.bir.2021.09.002