Finsif on tukenut vuosittain vastuullisen sijoittamisen tutkimusta stipendein
Finsif on jakanut stipendejä vastuullisesta sijoittamisesta kiinnostuneille opiskelijoille ja tutkijoille. Stipendien jaon tarkoituksena on ollut edistää vastuullisen sijoittamisen tutkimustyötä.
As sustainability becomes increasingly central to corporate strategy, corporate social responsibility (CSR) has emerged as an important factor influencing firm valuation in mergers and acquisitions (M&A). One critical aspect in M&A transactions is the acquisition premium, which represents the additional amount paid for a target firm beyond its market value. Such premiums are typically justified by anticipated synergies, strategic fit, or the potential to expand market presence. However, premiums can vary greatly across firms and industries, suggesting that additional factors, such as CSR, may influence valuation in M&A deals.
Research gap: focus on target firm
CSR has been linked to reduced firm-specific risk, improved stakeholder relations, and enhanced financial performance. Yet, while the acquirer’s CSR has been studied extensively, the role of the target’s CSR in shaping acquisition premiums remains underexplored—particularly in the European context. My thesis investigates whether European acquirers pay a premium for socially responsible target firms. Using a sample of 424 M&A transactions across 16 European countries between 2010 and 2024, I explore how pre-acquisition CSR ratings affect acquisition premiums, and whether this relationship is influenced by industry similarity and timing of valuation.
Target’s CSR has a positive impact on the acquisition premium
I find a statistically significant positive relationship between a target’s pre-acquisition CSR rating and the acquisition premium, indicating that acquirers are willing to pay more for socially responsible firms. This suggests that CSR is perceived as a value-enhancing attribute consistent with stakeholder theory, likely due to its association with lower risk, stronger stakeholder relationships, and enhanced reputation.
Second, the study shows that timing matters. Interestingly, the relationship between CSR and acquisition premium is more pronounced when the premium is measured 105 trading days before the deal announcement. Shorter windows (e.g., 42 days) fail to capture this effect. The finding suggests that CSR value may be priced in earlier in the deal process, and that traditional short-term event windows may underestimate the role of CSR in M&A valuations.
Third, the CSR effect on premiums is significantly more pronounced in horizontal acquisitions — when the acquirer and target operate in the same mid-industry. This finding supports the resource-based view: acquirers may seek to internalize the target’s CSR capabilities to enhance their own sustainability practices to gain competitive advantage.
CSR as a strategic value driver in M&A transactions
The study contributes to M&A literature by shifting focus from the acquirer to the target, highlighting CSR as a strategic asset in deal valuation. The findings suggest that target firms can maximise their value through transparent ESG reporting, as clear disclosures on CSR initiatives and performance help reduce uncertainty for potential acquirers potentially leading to higher deal premiums. For acquirers, this underscores the need to balance the long-term strategic value of sustainability against the risk of overpayment. For investors, the findings imply that CSR can be a predictive factor in deal valuation. Policymakers also play an important role by promoting high-quality CSR disclosures, as improved reporting standards can decrease information asymmetry in M&A transactions.
Nea Kajala, Vaasan yliopisto
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