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The Catering Effect of Green Mergers and Acquisitions in Heavy Pollution Industries

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  • Guangrui Liu
  • Qianqian Wu
  • Hongyong Zhou
  • Yunsong Wang

Abstract

We examine the motivation for green mergers and acquisitions (green M&As) in heavily polluting firms by considering the relationship between investors’ green M&A preferences and managerial decisions. Using data on green M&As conducted by heavily polluting firms in China for the 2008–2019 period, we construct an index of investors’ green M&A preferences, and find that when investors give a higher (lower) premium to green M&As, heavily polluting firms prefer to implement (avoid) green M&As. The relationship is time-varying, consistent with the catering effect. Simultaneously, when compared with non-SOEs, SOEs have a stronger green M&A catering effect. Finally, we find that managers can use investor preference as a substitute for media supervision to promote green M&A of heavily polluting firms.

Suggested Citation

  • Guangrui Liu & Qianqian Wu & Hongyong Zhou & Yunsong Wang, 2023. "The Catering Effect of Green Mergers and Acquisitions in Heavy Pollution Industries," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 59(6), pages 1865-1881, May.
    • Handle: RePEc:mes:emfitr:v:59:y:2023:i:6:p:1865-1881
    DOI: 10.1080/1540496X.2022.2140572
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    Cited by:

    1. Guangrui Liu & Hao Qian & Yong Shi & Deli Yuan & Ming Zhou, 2024. "How do firms react to capital market liberalization? Evidence from ESG reporting greenwashing," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(5), pages 4329-4344, September.
    2. Yingying Xu & Wen Wang & Honggui Gao & Huaxiong Zhu, 2024. "The Impact of Green Mergers and Acquisitions on Corporate Environmental Performance: Evidence from China’s Heavy-Polluting Industries," Sustainability, MDPI, vol. 16(9), pages 1-24, April.
    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).

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