Can ESG mitigate the diversification discount in cross-border M&A?
- Authors
- Kim, Byoung-jin; Jung, Jin-young; Cho, Sung-woo
- Issue Date
- May-2022
- Publisher
- ELSEVIER
- Keywords
- Corporate social responsibility; Cross-border M& A; Diversification effect; Environmental management; ESG
- Citation
- Borsa Istanbul Review, v.22, no.3, pp.607 - 615
- Journal Title
- Borsa Istanbul Review
- Volume
- 22
- Number
- 3
- Start Page
- 607
- End Page
- 615
- URI
- https://scholarworks.bwise.kr/gachon/handle/2020.sw.gachon/84658
- DOI
- 10.1016/j.bir.2021.09.002
- ISSN
- 2214-8450
- Abstract
- This study seeks to understand how environmental, social, and corporate governance (ESG) affects business performance and the diversification effect of cross-border mergers and acquisitions (M&A) by examining 129 events on cross-border M&A in the Korean Stock Price Index (KOSPI) market representing emerging capital markets between 2012 and 2018 in 38 target countries. The findings indicate that better ESG engagement has a positive effect on the business performance of cross-border M&A, supporting stakeholder theory and confirming that ESG can serve as a strategy for boosting business efficiency in cross-border M&A. The findings also confirm that diversification in cross-border M&A leads to a diversification discount on business performance, negatively affecting acquiring firms, but that ESG engagement can mitigate the diversification discount as a friendly channel. The study's main contribution is providing empirical evidence that ESG can serve as a friendly channel through which to address the diversification discount issue. © 2021 Borsa Ä°stanbul Anonim Åžirketi
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