The impact of Target’s ESG and ESG Gap on shareholder value creation
(2020) BUSN79 20201Department of Business Administration
- Abstract
- The aim of this paper is to cover a gap identified in the literature by finding empirical evidence explaining the relationship between the target firm’s ESG score and ESG Gap and the abnormal returns registered by the acquirer.
The paper uses a cross-sectional dataset based on an international sample of 171 merger and acquisition transactions, occurred between 2002 and 2020. The even-study method, based on a weighted market index, is implemented in order to calculate the cumulative abnormal returns. For the second part of the paper, the ordinary least squares model is used to quantify the effect of Target’s ESG score and ESG Gap on the abnormal returns registered by the bidder.
We find empirical evidence supporting the idea that... (More) - The aim of this paper is to cover a gap identified in the literature by finding empirical evidence explaining the relationship between the target firm’s ESG score and ESG Gap and the abnormal returns registered by the acquirer.
The paper uses a cross-sectional dataset based on an international sample of 171 merger and acquisition transactions, occurred between 2002 and 2020. The even-study method, based on a weighted market index, is implemented in order to calculate the cumulative abnormal returns. For the second part of the paper, the ordinary least squares model is used to quantify the effect of Target’s ESG score and ESG Gap on the abnormal returns registered by the bidder.
We find empirical evidence supporting the idea that while prioritizing on High ESG Targets leads to higher cumulative abnormal returns for the bidder, a significant difference between acquirer and target in terms of ESG performance leads to negative short-term cumulative returns as a reaction on potential dysfunctional behavior of stakeholder and difficulties in the integration of the two companies. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9021658
- author
- Klapushynskyi, Dmytro LU and Mogosanu, Cosmin Florin LU
- supervisor
- organization
- course
- BUSN79 20201
- year
- 2020
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- Shareholder value, ESG, ESG Gap, abnormal returns, M&A performance, corporate social responsibility
- language
- English
- id
- 9021658
- date added to LUP
- 2020-08-21 14:06:18
- date last changed
- 2020-08-21 14:06:18
@misc{9021658,
abstract = {{The aim of this paper is to cover a gap identified in the literature by finding empirical evidence explaining the relationship between the target firm’s ESG score and ESG Gap and the abnormal returns registered by the acquirer.
The paper uses a cross-sectional dataset based on an international sample of 171 merger and acquisition transactions, occurred between 2002 and 2020. The even-study method, based on a weighted market index, is implemented in order to calculate the cumulative abnormal returns. For the second part of the paper, the ordinary least squares model is used to quantify the effect of Target’s ESG score and ESG Gap on the abnormal returns registered by the bidder.
We find empirical evidence supporting the idea that while prioritizing on High ESG Targets leads to higher cumulative abnormal returns for the bidder, a significant difference between acquirer and target in terms of ESG performance leads to negative short-term cumulative returns as a reaction on potential dysfunctional behavior of stakeholder and difficulties in the integration of the two companies.}},
author = {{Klapushynskyi, Dmytro and Mogosanu, Cosmin Florin}},
language = {{eng}},
note = {{Student Paper}},
title = {{The impact of Target’s ESG and ESG Gap on shareholder value creation}},
year = {{2020}},
}