Green M&A dilemma: Unravelling the impact on high polluting enterprises’ performance

Abstract

This paper investigates the impact of green mergers and acquisitions (M&As) on shareholder value within High Polluting Enterprises (HPEs). Analyzing 1,840 M&A transactions involving listed HPEs in China from 2012 to 2020, our study reveals a substantial decline in HPEs' performance post-green M&As. This effect is particularly pronounced among non-state-controlled HPEs, those with fewer financial constraints, and those with lower ESG performance. Additionally, channel analysis indicates that HPEs witness poorer post-green M&As performance when making higher cash payments or offering a premium. Overall, our findings suggest that HPEs may prioritize environmental goals in green M&As, potentially compromising shareholder value.

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