Mergers and acquisitions (M&A) play an important role in shaping the landscape of modern business, helping companies reach new customers, drive growth, and capitalise on synergies. Simultaneously, the recognition of Environmental, Social, and Governance (ESG) has experienced a rapid escalation, prompting companies to incorporate ESG into their operational frameworks. As a result, investors become keen to understand how these factors affect the financial valuation, particularly within the context of M&A. This study examines the influence of ESG factors on stock market reactions around M&A announcements. Through a quantitative analysis of M&A events spanning from 2010 and 2024, it investigates the impact ESG scores have on cumulative abnormal returns (CAR). The findings reveal that the short-term average return of an M&A announcement is negative and that ESG scores themselves do not exhibit a significant impact on the CAR. However, interacting ESG scores with different industries show significant effects. In sectors such as energy and power, high technology, and material, ESG has a significant positive effect, while the financial sector yields a negative result on CAR. It can be concluded that the effect of ESG on CAR is dependent on the industry, suggesting that sectors who are sensitive to sustainability have more pressure to perform, thereby yielding a higher positive return upon announcement.
| Identifer | oai:union.ndltd.org:UPSALLA1/oai:DiVA.org:hj-64660 |
| Date | January 2024 |
| Creators | Azizi, Samir, Lam, Isabella |
| Source Sets | DiVA Archive at Upsalla University |
| Language | English |
| Detected Language | English |
| Type | Student thesis, info:eu-repo/semantics/bachelorThesis, text |
| Format | application/pdf |
| Rights | info:eu-repo/semantics/openAccess |
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