Corporate social responsibility and the choice of payment method in mergers and acquisitions

Hong Vo, Hien T. Nguyen and Hieu V. Phan

International Review of Financial Analysis, 2024, vol. 94, issue C

Abstract: This study examines the relationship between corporate social responsibility (CSR) and the choice of payment method in mergers and acquisitions (M&As). We find that acquiring firms' CSR is positively related to cash payments but negatively related to stock payments for acquisition deals, particularly for poorly governed firms with excessive CSR. Further analysis indicates that cash payments are positively related to acquisition bid premiums and reduce the likelihood of bid failure, but this payment method adversely affects shareholder wealth of poorly governed high-CSR acquiring firms. Our evidence suggests that managerial agency-motivated CSR is a determinant of the payment method in M&As that has important implication for acquirer shareholder value.

Keywords: Corporate social responsibility; Managerial agency; Stakeholder theory; Mergers and acquisitions; Methods of payment (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:94:y:2024:i:c:s105752192400173x

DOI: 10.1016/j.irfa.2024.103241

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