Does target country’s climate risk matter in cross-border M&A? The evidence in the presence of geopolitical risk

Li, Hao, Liu, Yue and Xu, Bing 2023. Does target country’s climate risk matter in cross-border M&A? The evidence in the presence of geopolitical risk. Journal of Environmental Management 344 , 118439. 10.1016/j.jenvman.2023.118439

Preview

PDF - Published Version Available under License Creative Commons Attribution. Download (1MB) | Preview

Abstract

The impact of climate risk on the payment method in cross-border M&A remains largely unknown in the literature. Using a large sample of UK outbound cross-border M&A deals in 73 target countries from 2008 to 2020, we find that a UK acquirer is more likely to employ an all-cash offer to signal its confidence in a target’s value if the target country faces a higher level of climate risk. This finding is consistent with the confidence signalling theory. Our results also suggest that acquirers are less likely to target vulnerable industries if target countries’ climate risk is high. In addition, we document that the presence of geopolitical risk would weaken the association between payment method and climate risk. Our findings are robust to the use of an instrumental variable approach and alternative measures of climate risk.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Subjects:	H Social Sciences > HG Finance
Publisher:	Elsevier
ISSN:	0301-4797
Date of First Compliant Deposit:	26 June 2023
Date of Acceptance:	15 June 2023
Last Modified:	28 Jul 2023 00:51
URI:	https://orca.cardiff.ac.uk/id/eprint/160576

Actions (repository staff only)

Edit Item