Corporate social responsibility learning in mergers and acquisitions

ABSTRACT

Using a large sample of mergers and acquisitions (M&As) in the U.S., we examine whether and how corporate social responsibility (CSR) spread between the target and acquirer affects firm value. We find that the stronger the target’s CSR performance relative to the acquirer’s, the higher the acquirer gains as well as synergy gains created by the acquisition. We also document acquirer’s improvements in CSR performance and market performance following the acquisition of a target with higher CSR. Moreover, the positive effect of CSR spread on the acquirer is more pronounced when the target has stronger operating performance. Overall, we attribute the source of the value creation to acquirer’s learning from the target’s CSR practices and experiences.

KEYWORDS:

• Corporate social responsibility (CSR)
• spread
• mergers and acquisitions (M&As)
• learning

Acknowledgments

This work was supported by [Fundamental Research Funds for the Central Universities] under Grant [2722019PY030]; [Academic Team Building Plan for Young Scholars from Wuhan University] under Grant [WHU2016012].

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the Fundamental Research Funds for the Central Universities [2722019PY030]; Academic Team Building Plan for Young Scholars from Wuhan University [WHU2016012].