Do sustainable practices influence value creation through acquisition? An analysis of Indian industries

Sabyasachi Mondal (), Debdas Rakshit (), Anamika (), Satish Chandra Tiwari () and Kishan Jee ()

Asian Economic and Financial Review, 2025, vol. 15, issue 2, 309-330

Abstract: This study examines the impact of pre-acquisition sustainability performance on announcement returns and post-acquisition market value in the metals and mining industry of India, based on acquisition dates. This study uses Bloomberg database data to derive proxy measures of sustainability using environmental, social, and governance (ESG) scores. It examines acquisitions from Nifty 500 companies from 2010 to 2020, focusing on the top 8 industries. The event study approach determines abnormal returns and cumulative abnormal returns over various periods. Two regression analyses evaluate the influence of pre-acquisition ESG scores on acquisition returns and market valuation. The announcement returns of the mining sector are adversely influenced by environmental scores, while the chemical sector benefits from positive social scores. Moreover, the environmental and social scores exert a detrimental impact on the valuation of the oil and gas industry. In a pre-acquisition scenario, investors can make informed decisions about a company's environmental, social, and governance issues, leading to above-average short-run profits in various industries, including chemical, metals, mining, and oil and gas. In the short term, investors can leverage free cash flow, earnings multiple analysis, and environmental, social, and governance considerations to invest in companies capable of generating above-average profits.

Keywords: Corporate social responsibility; Event study; ESG; Mergers and acquisitions; Nifty 500; Sustainability; Tobin's Q; Value creation. (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://archive.aessweb.com/index.php/5002/article/view/5340/8208 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:asi:aeafrj:v:15:y:2025:i:2:p:309-330:id:5340

Access Statistics for this article

More articles in Asian Economic and Financial Review from Asian Economic and Social Society
Bibliographic data for series maintained by Robert Allen ().