Publication Type

Journal Article

Version

publishedVersion

Publication Date

10-2020

Abstract

This study examines how target corporate social responsibility (CSR) affects the economic gains for acquirers, as reflected in market reaction to acquisition announcement, from two distinct perspectives: stakeholder preservation versus stakeholder appropriation. The stakeholder preservation perspective suggests that positive market reaction to an acquisition stems from potential new value creation by honoring implicit contracts and maintaining good relationships with target stakeholders. By contrast, the stakeholder appropriation perspective posits that positive market reaction is primarily derived through wealth transfer to acquirers by defaulting on implicit contracts with target stakeholders. Using a dataset of acquisitions in the US, we find that target CSR is positively associated with acquirer abnormal returns upon acquisition announcement. Moreover, stakeholder value congruence between the merging firms strengthens this positive relationship, whereas business similarity between them weakens it. These findings align with the stakeholder preservation perspective and challenge the stakeholder appropriation.

Discipline

Business Law, Public Responsibility, and Ethics | Organizational Behavior and Theory | Strategic Management Policy

Research Areas

Strategy and Organisation

Publication

Academy of Management Journal

Volume

63

Issue

5

First Page

1535

Last Page

1560

ISSN

0001-4273

Identifier

10.5465/amj.2018.0229

Publisher

Academy of Management

Copyright Owner and License

Publisher

Additional URL

https://doi.org/10.5465/amj.2018.0229

Download

Share

COinS