The ESG Advantage: Exploring the Relationship Between Sustainability and Corporate Acquisitions

Abstract: This thesis investigates the impact of ESG scores on corporate acquisitions in Europe and the United States, examining whether firms with ESG scores are more likely to be acquired, and to which extent the ESG score of a target firm may affect the bid premium. Findings suggest that firms with an ESG score are more likely to be acquired compared to firms without, and that a high score implies a lower probability of being acquired compared to a low score. This is statistically significant at the 1% level. The correlation is stronger in the US market. Additionally, no correlation for firms with high ESG scores and bid premiums has been confirmed statistically, indicating that deals are unaffected by the ESG performance of a target firm in terms of bid premiums.