Clean and green, but what does it mean?
Abstract: The aim of this paper is to study what role sustainability commitments of the target company have on merger strategies by studying bid premiums determinants between the years 2000 and 2020. The paper uses multivariable regression models that include, among other variables, the degree the target company commits to sustainability and the difference in how much the target and the acquirer commit to sustainability. The paper uses a group of ESG-ratings to evaluate how much a company commits to sustainability. The results show that there exists a statistically significant negative relationship between a target company’s ESG-rating and the bid premium. A higher ESG-rating of the target company appears to result in a lower bid premium. The results also indicate that the difference in how much the target and the acquirer commit to ESG has no significant effect on the bid premium.
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