Social Responsibility and Operational Risks in Merger and Acquisition Decisions

34 Pages Posted: 21 Feb 2020

See all articles by Yuqi Peng

Yuqi Peng

University of South Carolina - Darla Moore School of Business

Sining Song

University of Tennessee, Knoxville - Haslam College of Business

Keith Skowronski

University of South Carolina - Darla Moore School of Business

Yan Dong

University of South Carolina - Darla Moore School of Business

Date Written: January 25, 2020

Abstract

We study how corporate social responsibility (CSR) impacts a manufacturer’s decisions on mergers and acquisitions (M&As). M&As are accompanied by significant changes in organizations and operational systems, and the decision of M&A may be affected by potential challenges and operational risks in post-M&A integration. CSR may bring a broad set of corporate values to address these challenges. To empirically investigate the role of CSR in M&A decisions, we estimate bootstrap-based conditional logit models using secondary data from 2005-2016. We find that a firm’s CSR score is positively associated with its acquiring possibility as CSR promotes a long-term perspective on value-creation, facilitates integration across organizations, and buffers against risks of failures. We also find such positive impact can be extended to cases when firms are lean in operations and when the purposes of M&As involve innovation or emerging market expansion. Our extended analyses further show that the beneficial role of CSR is primarily driven by the corporate governance dimension, instead of social or environmental dimension. Theoretical and managerial insights are also discussed.

Keywords: mergers and acquisitions, corporate social responsibility, lean operations, innovation, emerging markets, bootstrap-based conditional logit estimation

Suggested Citation

Peng, Yuqi and Song, Sining and Skowronski, Keith and Dong, Yan, Social Responsibility and Operational Risks in Merger and Acquisition Decisions (January 25, 2020). Available at SSRN: https://ssrn.com/abstract=3525305 or http://dx.doi.org/10.2139/ssrn.3525305

Yuqi Peng (Contact Author)

University of South Carolina - Darla Moore School of Business ( email )

1014 Greene St
Columbia, SC 29208
United States

Sining Song

University of Tennessee, Knoxville - Haslam College of Business ( email )

453 Haslam Business Building
Knoxville, TN 37996-4140
United States

Keith Skowronski

University of South Carolina - Darla Moore School of Business ( email )

United States

Yan Dong

University of South Carolina - Darla Moore School of Business ( email )

1705 College St
Francis M. Hipp Building
Columbia, SC 29208
United States

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