Impact of ESG Scores on Value Creation in M&A Deals in Different Industries: Evidence from Developed Capital Markets

In that research we analyzed the impact of the acquirer’s pre-merger sustainable policy on the short-term M&A performance. Acquirers’ sustainable performance has a vital role in the M&A success due to the more cautious consideration of targets, stronger relationships with current stakeholders and better reputation among acquired company’s management, which tend to lead to the higher synergies. We contributed to the current literature by the sectoral segmentation the relationship between acquirer’s pre-merger sustainable policy and M&A performance as well as consideration of each factor of the sustainable policy. Overall, we analyzed 412 completed deals from the developed capital markets in 2018-2023 among acquirers from vulnerable to ESG problems industries and non-vulnerable. We found that acquirer’s pre-merger sustainable policy has impact on the M&A performance mostly in non-vulnerable to ESG problems industries. Moreover, sustainable policy levels upgrade among acquirers, which have recently initiated ESG policy, has positive impact on M&A performance in both types of industries.