Does ESG performance influence M&A premium? - A quantitative study of the ESG impact on M&A premium, using an international sample for deals announced from 2003-to 2021

Abstract

This thesis examines the relationship between target firms' ESG performance and M&A premium. This is done through three multivariate regression analyses. The results show that target shareholder wealth during takeovers is positively related to the governance score of the target firm. Looking at the results when the acquirer is public, the findings show that the M&A premium is positively linked to the overall ESG score of the target company, as well as the environmental and social score. Further, we find that target companies benefit from being acquired by companies with higher environmental scores than themselves, as this proves to generate a higher M&A premium. This insight gives support for the shareholder theory.