The Role of ESG in Merge and Acquisition Deals

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The study investigates how a target's ESG score influences an acquirer's return on assets (ROA) and stock price changes following mergers and acquisitions. It finds that the effect on ROA is significant, with low-ESG acquirers experiencing greater declines compared to high-ESG acquirers due to higher integration costs. While most acquirers face ROA drops post-deal, those with higher pre-M&A ESG levels benefit from a more favorable outcome. However, the target's ESG score does not significantly affect the acquirer's stock price changes.