Short-term Wealth Effects of Corporate Social Responsibility? - Empirical Evidence from ESG Ratings of Firms Involved in M&A Transactions

In the past decades, Corporate Social Responsibility (CSR) has been discussed as the "stakeholder approach" of managing firms, while opposing researchers have taken on views of CSR being at the "shareholder's expense". We aim to link this discussion with various factors that have been proposed by academics to have a predictive power on the outcome of M&A transactions. Expanding the research on M&A-value, we assess CSR wealth implications as proxied by sustainability ratings. By studying short-term market reactions around the deal announcement, our results indicate support for the "stakeholder approach". We find target shareholder wealth to positively relate to high CSR-similarity between target and acquirer. While in our sample target owners retrieve a lion's share of M&A synergies, barely changing returns of the acquirers' shareholders do not alter with CSR-reputation of either parties