Peer Effect in Merger and Acquisition Activities and Its Impact on Corporate Sustainable Development: Evidence from China

Yue Gu, Shenglin Ben and Jiamin Lv
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Yue Gu: School of Management, Zhejiang University, Hangzhou 310058, China
Shenglin Ben: School of Management, Zhejiang University, Hangzhou 310058, China
Jiamin Lv: School of Management, Zhejiang University, Hangzhou 310058, China

Sustainability, 2022, vol. 14, issue 7, 1-20

Abstract: The research aims to investigate the existence of peer effect in mergers and acquisitions and study its impact on corporate sustainable development. It first constructs a peer effect testing model to examine whether there is peer effect in mergers and acquisitions, based on quarterly data in China between 2005 and 2019. Then, two econometric models are proposed separately to explore the impact of economic policy uncertainty on the merger and acquisition peer effect, as well as how the peer effect affects corporate sustainability. The key findings show that (i) firms tend to imitate their peers’ merger and acquisition behaviors, which means that the peer effect does exist in mergers and acquisitions; (ii) economic policy uncertainty could strengthen the peer effect in mergers and acquisitions; (iii) the peer effect has a negative impact on corporate sustainable development, and the impact is more significant within a relatively short period. Therefore, this study enriches the research of behavior science in mergers and acquisitions, improves the accuracy of peer effect testing and enables both firms and policymakers to mitigate irrational imitation in merger and acquisition deals, thus achieving their sustainable development goals.

Keywords: merger and acquisition; peer effect; corporate sustainable development; economic policy uncertainty; behavior science (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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