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ABSTRACT
Based on data from Chinese-listed firms from 2008 to 2016, we explore the impact of corporate social responsibility (CSR) on the likelihood of becoming a target in cross-border mergers and acquisitions (M&As). We find that CSR performance is positively associated with the firm’s likelihood of becoming a target in cross-border M&As, but this effect is significant only in higher competitive markets and for non-state-owned enterprises. Moreover, only high-quality CSR disclosure can improve the likelihood of becoming a M&A target. Therefore, the governments in emerging markets should guide listed companies to disclose high-quality CSR reports and propel the process of marketization.
Disclosure statement
No, potential conflict of interest was reported by the authors.
Notes
1. Source: UNCAD < World Investment Report 2018 >.
2. Such as (i) establishing two stock exchanges, Shanghai and Shenzhen Stock Exchanges in 1989 and 1991, respectively, (ii) simplifying and decentralizing foreign exchange administration and establishing a foreign exchange market to facilitate trading of the Chinese Renminbi with several currencies.
3. We obtain the result according to The World Investment Report 2016.
4. In Krishnamurti et al. (Citation2019)’s paper, the main subject is to examine whether a firm’s CSR influence M&A deal characteristics, target choice and acquisition performance. they find that targets with CSR activities are more likely to be acquired by CSR-oriented bidder firms. Although the focal research points are different from this paper, their results can partially document that targets with CSR activities are more likely to be acquired.
5. A documentary on why Chinese firms prefer oversea enterprise.http://biz.ifeng.com/c/7rkz5QUyIPg.
6. In addition, for the larger geographic distance, information asymmetry between oversea enterprises and targets are greater, therefore it is harder and more costly to gain an insight into target firms. in other words, oversea acquirers might pay more attention to CSR performance.
7. Since China joined the World Trade Organization (WTO) in 2002, due to restrictions on foreign investment being gradually eliminated, the number of M&As from foreign firms has increased several times, especially for listed companies. For foreign firms, acquiring Chinese-listed companies has become common. On the other hand, because the Chinese government merely required listed firms to disclose their CSR performance every year, we are unable to obtain CSR scores for the unlisted targets.
8. There are only three deals withdrawn.
9. We also use the property of the largest shareholder to classify SOEs and non-SOEs and run similar regressions as in Table 9. Our findings continue to hold in this case, and are available upon request.
10. For since 2009 the CSRC has required more than 260 listed companies in three categories of the Shanghai stock exchange to disclose CSR reports along with annual reports, that’s it is not until 2009 that we can distinguish whether a firm’s CSR disclosure is voluntary or not. In addition, the intention variable is missing in RKS database in 2009 and 2010. Therefore, the sample period is from 2011–2016.
11. In RKS database, 4 firms’ CSR performance are rated as ‘A+’; 7 firms’ CSR performance are rated as ‘A’; 6 firms’ CSR performance are rated as ‘A-.’ However, the ratio of firms whose CSR performance is rated as ‘A’ is up to 20% among firms disclose CSR information mandatorily.