Impact of targets’ ESG scores on M&A takeover premiums

Abstract

Environmental, Social, and Governance considerations are becoming more prominent for both society and the corporate world, as sustainability, ethical, and climate concerns increase. With this increase in relevance, in the context of Mergers & Acquisitions (M&A), are acquiror firms committed to incorporating targets’ ESG practices to the point where takeover premiums are affected? This is the proposed research for this dissertation. As regulatory conditions and risk perceptions aren’t universal, for secondary research topics we also analyze if the impact targets’ ESG scores have on premiums varies with industries and regions. The approach for the analysis was regression models, through which we concluded that targets’ ESG scores significantly and positively impact premiums paid by acquirors overall. As exceptions, we found that in some industries and regions, increases in targets’ ESG scores are not associated with an increase in the takeover premium.

Date of Award	4 Feb 2025
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	José D. Garcia Revelo (Supervisor)