Evidence on the trade-off between corporate social responsibility and mergers and acquisitions investment

Chandrasekhar Krishnamurti, Syed Shams and Hasibul Chowdhury
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Chandrasekhar Krishnamurti: UniSA Business School, University of South Australia, Adelaide, SA, Australia
Syed Shams: School of Commerce, University of Southern Queensland, Springfield, QLD, Australia
Hasibul Chowdhury: School of Business, The University of Queensland, Brisbane, QLD, Australia

Australian Journal of Management, 2021, vol. 46, issue 3, 466-498

Abstract: In this article, we investigate whether there is a trade-off between corporate social responsibility (CSR) and mergers and acquisitions (M&A) investments. Consistent with conflict resolution view of stakeholder theory, our results document a negative relationship between CSR scores and M&A activity. We further show that the tendency of CSR firms’ low engagements in M&A investmen ts is valid only for firms with no slack. We also find that firms choosing to trade off pay a lower bid premium to targets to create value for acquiring shareholders. These findings are robust to several alternative proxies and endogeneity tests. JEL Classification: G32, G34

Keywords: Corporate social responsibility; mergers and acquisitions; stakeholder theory; trade-off theory (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:46:y:2021:i:3:p:466-498

DOI: 10.1177/0312896220950394

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