Evidence on the trade-off between corporate social responsibility and mergers and acquisitions investment. Issue 3 (August 2021)

• Record Type: Journal Article
• Authors: Krishnamurti, Chandrasekhar; Shams, Syed; Chowdhury, Hasibul
• Is Part Of: Australian journal of management. Volume 46:Issue 3(2021)
• Page Start: 466
• Page End: 498
• Publication Date: 2021-08
• Subjects: Corporate social responsibility -- mergers and acquisitions -- stakeholder theory -- trade-off theory; Management -- Periodicals; Management -- Australia -- Periodicals; Business enterprises -- Finance -- Periodicals; Industrial management -- Australia -- Periodicals; 330
• DOI: 10.1177/0312896220950394
• Languages: English
• ISSNs: 0312-8962

Abstract

In this article, we investigate whether there is a trade-off between corporate social responsibility (CSR) and mergers and acquisitions (M&A) investments. Consistent with conflict resolution view of stakeholder theory, our results document a negative relationship between CSR scores and M&A activity. We further show that the tendency of CSR firms' low engagements in M&A investmen ts is valid only for firms with no slack. We also find that firms choosing to trade off pay a lower bid premium to targets to create value for acquiring shareholders. These findings are robust to several alternative proxies and endogeneity tests. JEL Classification:G32, G34