Abstract
This paper investigates the performance of bank M&As from the targets’ perspective, considering the role of acquirers’ ESG performance. Using a sample of M&As in the U.S. banking sector over the period 2012–2023, we assess the valuation effects of bank M&As for target shareholders, applying the event-study methodology. Cumulative Abnormal Returns over various event windows surrounding the M&A announcements are estimated using the market-adjusted model, with statistical significance tested using the BMP-test and the Corrado-test. To assess the impact of acquirers’ ESG scores on targets’ CARs, we apply univariate and multivariate analyses. The results show that, on average, target firms’ shareholders gain 15.8% over the three-day (-1, 1) event window upon M&A announcements.Applying alternative event windows, the results confirm positive valuation effects of 16.4% in the five-day (-2, 2) event window. Using two sub-samples based on the acquirers’ ESG score, the univariate analysis with the t-test indicates that targets’ returns are 5.7% lower for M&As announced by acquirers with high ESG performance (above median) compared to those announced by acquirers with low ESG performance. The same results are confirmed using the non-parametric MannWhitney U test. After controlling for deal-specific and target-specific characteristics, the multivariate regression analysis with robust standard errors and year-fixed effects confirms that acquirers’ ESG performance has a negative and statistically significant (at the 5% level) effect on targets’ gains. Overall, we show that the acquirers’ ESG performance is a crucial factor reflecting their strategy towards ESG investments, thereby affecting the targets’ shareholder value upon M&As.
Presenters
Ioannis TampakoudisVice-Rector/Professor, Business Administration, University of Macedonia, Greece
Details
Presentation Type
Paper Presentation in a Themed Session
Theme
KEYWORDS
Bank Mergers and Acquisitions; ESG Performance, Sustainable Investments
