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theses

My dissertation consists of three essays that explore under which conditions corporate social responsibility (CSR) contributes to the creation of shareholder value in mergers and acquisitions (M&As). Essay 1 and Essay 2 focus on firm-level CSR and shareholder value in domestic M&As, while Essay 3 focuses on country-level CSR and shareholder value in international M&As. In Essay 1, entitled “Do CSR Ratings Affect Value Creation from M&As?” I examine how differences between target and acquirer CSR ratings affect the value acquisitions create for acquirers’ shareholders. I propose that for each CSR dimension the target–acquirer CSR rating gap results in expectations of post-acquisition changes in the level of target CSR. These changes can be expected to elicit either supportive or unsupportive post acquisition behavior of the target stakeholder groups affected by each CSR dimension, which affects the stock market’s assessment of the acquisition. Results of an event study support my hypotheses. In Essay 2, entitled “Effect of Target CSR on Acquisition Premium,” I examine how a target firm’s corporate social responsibility (CSR) and social irresponsibility (CSiR) ratings affect the premium that acquirers pay for the target. I argue that information on a target’s CSR (CSiR) ratings can send a positive (negative) signal about not just its CSR (CSiR) performance but also about its overall quality. I propose that CSiR reduces the premium that acquirers are offering, while CSR increases the premium. Results suggests that in situations of high information asymmetry acquirers tend to rely more on signals associated with the target’s CSiR rating, leading them to offer a lower premium. In Essay 3, entitled “Environmental Regulations: Market Reactions to Cross-Border M&As,” I examine how the difference in the stringency of environmental regulations between the home- and the host country affects investors’ responses to cross-border M&A (CBA) announcements. I argue that investors negatively respond to CBA announcements that involve an acquirer entering a host country with lower environmental regulations than those of the home country because of the potential added reputational risk and/or added environmental protection costs associated with such acquisitions. Results provide support for my theoretical arguments.

ETD_7342

Ph.D.

Includes bibliographical references

by Gunae Choi

doi:10.7282/T36975S3

ETD doctoral

The author owns the copyright to this work.