The effect of target's CSR performance on M&A deal premiums: a case for service firms.

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Date: May 2022
From: Review of Managerial Science(Vol. 16, Issue 4)
Publisher: Springer
Document Type: Report; Brief article
Length: 245 words

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Abstract :

Keywords: Corporate social responsibility; Firm value; Acquisitions; Deal premium; Services Abstract In this study, we examine the effect of corporate social responsibility (CSR) performance on mergers and acquisitions (M&A) deal premiums. More precisely, we explore the value enhancing role of target's pre-acquisition CSR performance at an M&A transaction by focusing on the deal premiums. We also examine whether firms in the service industries experience a higher deal premium due to their CSR performance compared to firms in other industries. We use several data sources (i.e. MSCI ESG KLD STATS, FactSet, Compustat and CRSP) to compile the final sample of the study, 277 completed acquisitions over the period 1996--2018. We use ordinary least square regression to estimate empirical models and find that target's pre-acquisition CSR performance is positively related to deal premium. Moreover, the moderation analysis indicates that the positive effect of targets' CSR performance on deal premium is more profound for firms operating in the service industries than those in non-service industries. The findings of the study is robust to different operationalizations of deal premium. Additionally, examining the positive and negative CSR attributes separately, we reveal consistent evidence with the prediction that positive CSR involvement of target firms increases the deal premium. Author Affiliation: (1) William F. Harrah College of Hospitality, University of Nevada Las Vegas, Las Vegas, USA (2) Department of Tourism Administration, Bogaziçi University, Istanbul, Turkey (a) Article History: Registration Date: 05/03/2021 Received Date: 09/26/2020 Accepted Date: 05/03/2021 Online Date: 05/15/2021 Byline:

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Gale Document Number: GALE|A702342475