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The Impact of Foreign Mergers and Acquisitions on ESG Performance of Chinese Listed Companies: Empirical Analysis Based on the PSM-DID Method

Published in Economics (Volume 12, Issue 2)
Received: 8 May 2023     Accepted: 23 May 2023     Published: 29 May 2023
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Abstract

In recent years, green finance has led to increased focus on ESG performance, measuring corporate social responsibility. Meanwhile, mergers and acquisitions (M&A) play a crucial role in international capital flow, which have attracted widespread attention. Exploring the impact of foreign M&A on ESG performance of companies has become an important research topic. Based on the sample of foreign mergers and acquisitions of Chinese listed companies from 2017 to 2022, this paper innovatively examines the impact and mechanism of foreign M&A on Chinese listed companies' ESG performance using propensity score matching and multi-period difference-in-differences methods. Findings indicate: (1) Foreign M&A significantly improves corporate ESG performance; (2) The impact of foreign M&A varies across different types of enterprises. Regarding the acquiring companies, foreign companies have a greater impact on improving ESG performance compared to companies from Hong Kong, Macau, and Taiwan. On the target companies' side, large-scale companies are more effective in utilizing the opportunities provided by mergers and acquisitions (M&A) to leverage their advantages. (3) Foreign M&A is particularly effective in enhancing environmental indicators within the ESG framework; (4) The mechanism behind this improvement involves a significant green culture effect, which promotes the improvement of ESG performance by amplifying the influence of corporate green culture.

Published in Economics (Volume 12, Issue 2)
DOI 10.11648/j.eco.20231202.13
Page(s) 53-60
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2023. Published by Science Publishing Group

Keywords

ESG, Foreign M&A, DID-PSM

References
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[2] Kim B, Jung J, Cho S. Can ESG mitigate the diversification discount in cross-border M&A? [J]. Borsa Istanbul Review, 2022, 22 (3): 607-615.
[3] Cardillo G, Harasheh M. Stay close to me: What do ESG scores tell about the deal timing in M&A transactions? [J]. Finance Research Letters, 2023, 51: 103498.
[4] Gomes M, Marsat S. Does CSR impact premiums in M&A transactions? [J]. Finance Research Letters, 2018, 26: 71-80.
[5] Barros V, Matos P V, Sarmento J M, et al. M&A activity as a driver for better ESG performance [J]. Technological Forecasting and Social Change, 2022, 175: 121338.
[6] Conyon M J, Girma S, Thompson S, et al. The productivity and wage effects of foreign acquisition in the United Kingdom [J]. The Journal of Industrial Economics, 2002, 50 (1): 85-102.
[7] Dyck A, Lins K V, Roth L, et al. Do institutional investors drive corporate social responsibility? International evidence [J]. Journal of financial economics, 2019, 131 (3): 693-714.
[8] Shleifer A, Vishny R W. Management entrenchment: The case of manager-specific investments [J]. Journal of financial economics, 1989, 25 (1): 123-139.
[9] Ioannou, I. and Serafeim, G., 2012, “What Drives Corporate Social Performance? The Role of Nation-level Institutions”, Journal of International Business Studies, vol. 43, pp. 834~864.
[10] Borghesi, R., Houston, J. F., & Naranjo, A. (2014). Corporate socially responsible investments: CEO altruism, reputation, and shareholder interests. Journal of Corporate Finance, 26, 164-181.
[11] Boone A, Uysal V B. Reputational concerns in the market for corporate control [J]. Journal of Corporate Finance, 2020, 61: 101399.
[12] Gomes, M., & Marsat, S. (2018). Does CSR impact premiums in M&A transactions? Finance Research Letters, 26, 71-80.
[13] Yen T Y, André P. Market reaction to the effect of corporate social responsibility on mergers and acquisitions: Evidence on emerging markets [J]. The Quarterly Review of Economics and Finance, 2019, 71: 114-131.
[14] Tampakoudis I, Anagnostopoulou E. The effect of mergers and acquisitions on environmental, social and governance performance and market value: Evidence from EU acquirers [J]. Business Strategy and the Environment, 2020, 29 (5): 1865-1875.
[15] Barros, V., Matos, P. V., Sarmento, J. M., & Vieira, P. R. (2022). M&A activity as a driver for better ESG performance. Technological Forecasting and Social Change, 175, 121338.
[16] Heckman, J. J. (1979). Sample selection bias as a specification error. Econometrica: Journal of the econometric society, 153-161.
[17] Baron, R. M., & Kenny, D. A. (1986). The moderator–mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations. Journal of personality and social psychology, 51 (6), 1173.
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  • APA Style

    Xiao Lu, Minxing Zhu. (2023). The Impact of Foreign Mergers and Acquisitions on ESG Performance of Chinese Listed Companies: Empirical Analysis Based on the PSM-DID Method. Economics, 12(2), 53-60. https://doi.org/10.11648/j.eco.20231202.13

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    ACS Style

    Xiao Lu; Minxing Zhu. The Impact of Foreign Mergers and Acquisitions on ESG Performance of Chinese Listed Companies: Empirical Analysis Based on the PSM-DID Method. Economics. 2023, 12(2), 53-60. doi: 10.11648/j.eco.20231202.13

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    AMA Style

    Xiao Lu, Minxing Zhu. The Impact of Foreign Mergers and Acquisitions on ESG Performance of Chinese Listed Companies: Empirical Analysis Based on the PSM-DID Method. Economics. 2023;12(2):53-60. doi: 10.11648/j.eco.20231202.13

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  • @article{10.11648/j.eco.20231202.13,
      author = {Xiao Lu and Minxing Zhu},
      title = {The Impact of Foreign Mergers and Acquisitions on ESG Performance of Chinese Listed Companies: Empirical Analysis Based on the PSM-DID Method},
      journal = {Economics},
      volume = {12},
      number = {2},
      pages = {53-60},
      doi = {10.11648/j.eco.20231202.13},
      url = {https://doi.org/10.11648/j.eco.20231202.13},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.eco.20231202.13},
      abstract = {In recent years, green finance has led to increased focus on ESG performance, measuring corporate social responsibility. Meanwhile, mergers and acquisitions (M&A) play a crucial role in international capital flow, which have attracted widespread attention. Exploring the impact of foreign M&A on ESG performance of companies has become an important research topic. Based on the sample of foreign mergers and acquisitions of Chinese listed companies from 2017 to 2022, this paper innovatively examines the impact and mechanism of foreign M&A on Chinese listed companies' ESG performance using propensity score matching and multi-period difference-in-differences methods. Findings indicate: (1) Foreign M&A significantly improves corporate ESG performance; (2) The impact of foreign M&A varies across different types of enterprises. Regarding the acquiring companies, foreign companies have a greater impact on improving ESG performance compared to companies from Hong Kong, Macau, and Taiwan. On the target companies' side, large-scale companies are more effective in utilizing the opportunities provided by mergers and acquisitions (M&A) to leverage their advantages. (3) Foreign M&A is particularly effective in enhancing environmental indicators within the ESG framework; (4) The mechanism behind this improvement involves a significant green culture effect, which promotes the improvement of ESG performance by amplifying the influence of corporate green culture.},
     year = {2023}
    }
    

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    AU  - Xiao Lu
    AU  - Minxing Zhu
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    DO  - 10.11648/j.eco.20231202.13
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    JF  - Economics
    JO  - Economics
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    UR  - https://doi.org/10.11648/j.eco.20231202.13
    AB  - In recent years, green finance has led to increased focus on ESG performance, measuring corporate social responsibility. Meanwhile, mergers and acquisitions (M&A) play a crucial role in international capital flow, which have attracted widespread attention. Exploring the impact of foreign M&A on ESG performance of companies has become an important research topic. Based on the sample of foreign mergers and acquisitions of Chinese listed companies from 2017 to 2022, this paper innovatively examines the impact and mechanism of foreign M&A on Chinese listed companies' ESG performance using propensity score matching and multi-period difference-in-differences methods. Findings indicate: (1) Foreign M&A significantly improves corporate ESG performance; (2) The impact of foreign M&A varies across different types of enterprises. Regarding the acquiring companies, foreign companies have a greater impact on improving ESG performance compared to companies from Hong Kong, Macau, and Taiwan. On the target companies' side, large-scale companies are more effective in utilizing the opportunities provided by mergers and acquisitions (M&A) to leverage their advantages. (3) Foreign M&A is particularly effective in enhancing environmental indicators within the ESG framework; (4) The mechanism behind this improvement involves a significant green culture effect, which promotes the improvement of ESG performance by amplifying the influence of corporate green culture.
    VL  - 12
    IS  - 2
    ER  - 

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Author Information
  • Finance, Zhongnan University of Economics and Law, Wuhan, China

  • Finance, Zhongnan University of Economics and Law, Wuhan, China

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