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

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

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.

Suggested Citation

  • Vo, Hong & Nguyen, Hien T. & Phan, Hieu V., 2024. "Corporate social responsibility and the choice of payment method in mergers and acquisitions," International Review of Financial Analysis, Elsevier, vol. 94(C).
    • Handle: RePEc:eee:finana:v:94:y:2024:i:c:s105752192400173x
    DOI: 10.1016/j.irfa.2024.103241
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    More about this item

    Keywords

    Corporate social responsibility; Managerial agency; Stakeholder theory; Mergers and acquisitions; Methods of payment;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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