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

Author

Listed:
  • 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)

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

Suggested Citation

  • Chandrasekhar Krishnamurti & Syed Shams & Hasibul Chowdhury, 2021. "Evidence on the trade-off between corporate social responsibility and mergers and acquisitions investment," Australian Journal of Management, Australian School of Business, vol. 46(3), pages 466-498, August.
    • Handle: RePEc:sae:ausman:v:46:y:2021:i:3:p:466-498
    DOI: 10.1177/0312896220950394
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    More about this item

    Keywords

    Corporate social responsibility; mergers and acquisitions; stakeholder theory; trade-off theory;
    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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