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Green M&A, legitimacy and risk‐taking: evidence from China’s heavy polluters

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  • Bin Li
  • Lei Xu
  • Ron McIver
  • Qian Wu
  • Ailing Pan

Abstract

Green merger and acquisition (M&A) activities may improve heavy polluters’ regulatory and organisational legitimacy, allowing greater access to resources and enhancing risk‐taking capacity. Adopting a proprietary 2008–2013 dataset, we examine outcomes from green M&A for China’s heavy‐polluting firms. We find that heavy polluters’ green M&A is associated with greater risk‐taking. Greater access to resources, and reduced financing constraints and tax liabilities suggest improved legitimacy. These effects are positively related to state ownership and government intervention in the M&A process. Our findings support the Porter hypothesis and have policy implications for green management of heavy polluters in emerging markets.

Suggested Citation

  • Bin Li & Lei Xu & Ron McIver & Qian Wu & Ailing Pan, 2020. "Green M&A, legitimacy and risk‐taking: evidence from China’s heavy polluters," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(1), pages 97-127, March.
    • Handle: RePEc:bla:acctfi:v:60:y:2020:i:1:p:97-127
    DOI: 10.1111/acfi.12597
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    Cited by:

    1. Yang, Lisi & Liu, Linqing & Yan, Kai & Cai, Chunhua & Geng, Yannan, 2023. "“Carrot and stick”: Green fiscal policy, upper echelons expertise, and the green mergers and acquisitions," Finance Research Letters, Elsevier, vol. 58(PD).
    2. Li, Bin & Guo, Fei & Xu, Lei & Meng, Siqi, 2024. "Fintech business and corporate social responsibility practices," Emerging Markets Review, Elsevier, vol. 59(C).
    3. Hu, Jun & Fang, Qi & Wu, Huiying, 2023. "Environmental tax and highly polluting firms' green transformation: Evidence from green mergers and acquisitions," Energy Economics, Elsevier, vol. 127(PB).
    4. Pan, Ailing & Xu, Lei & Li, Bin & Ling, Runze, 2020. "The impact of supply chain finance on firm cash holdings: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 63(C).
    5. Li, Bin & Pan, Ailing & Xu, Lei & Liu, Xin & Qin, Shuqian, 2020. "Imprinting and peer effects in acquiring state ownership: Evidence from private firms in China," Pacific-Basin Finance Journal, Elsevier, vol. 61(C).

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