Stemming the tide: Does climate risk affect M&A performance?
Article
Lodh, S., Deshmukh, N. and Rohani, A. 2024. Stemming the tide: Does climate risk affect M&A performance? Business Strategy and the Environment. 33 (2), pp. 858-881. https://doi.org/10.1002/bse.3518
Type | Article |
---|---|
Title | Stemming the tide: Does climate risk affect M&A performance? |
Authors | Lodh, S., Deshmukh, N. and Rohani, A. |
Abstract | We examine the effect of climate change risks (CCR) on firms' decision of engaging in mergers and acquisitions (M&A) and M&A performance. In this study we use the responses by firms on ‘climate change-related risks and opportunities’ of the CDP survey and 1,372 deals of listed US firms during 2010-2020. Consistent with risk vulnerability theory, our evidence indicates that firms with higher CCR have a lower probability of engaging in M&As. After controlling for possible endogeneity, our results also indicate that if acquirers with higher climate change risks choose to engage in M&A, it significantly reduces the announcement returns. These findings suggest that extant measures of climate change risks should be rethought when evaluating M&A efficiency. More broadly, our paper provides causal evidence that managers need to integrate CCR into their formal risk management systems to avoid unsuccessful M&As. |
Keywords | background risk; CDP; climate change risks; mergers and acquisitions; risk vulnerability theory |
Sustainable Development Goals | 13 Climate action |
Middlesex University Theme | Sustainability |
Publisher | Wiley |
Journal | Business Strategy and the Environment |
ISSN | 0964-4733 |
Electronic | 1099-0836 |
Publication dates | |
Online | 02 Aug 2023 |
05 Feb 2024 | |
Publication process dates | |
Submitted | 13 Oct 2022 |
Accepted | 12 Jul 2023 |
Deposited | 07 Sep 2023 |
Output status | Published |
Publisher's version | License File Access Level Open |
Copyright Statement | © 2023 The Authors. Business Strategy and The Environment published by ERP Environment and John Wiley & Sons Ltd. |
Digital Object Identifier (DOI) | https://doi.org/10.1002/bse.3518 |
Web of Science identifier | WOS:001041375200001 |
Language | English |
https://repository.mdx.ac.uk/item/92q8q
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