Green mergers and acquisitions and corporate environmental responsibility: Substantial transformation or strategic arbitrage?

Abstract

Green mergers and acquisitions (GM&A) are pivotal for attaining green competitive advantages and fostering sustainable development. This study exploits data from Chinese publicly traded companies spanning 2010–2021 to examine the impact of GM&A on corporate environmental responsibility (CER). Utilizing a difference-in-differences design, the results document that GM&A significantly enhances firms' environmental responsibility. This conclusion remains robust after a comprehensive set of checks. GM&A spurs green technology innovation, eases financial constraints, and elevates corporate environmental awareness, thus mitigating environmental pollution. Additionally, the positive impact of GM&A on CER is particularly pronounced in regions with high market liberalization and firms with substantial social capital. These findings offer valuable insights for policymakers crafting GM&A policies to raise environmental quality and contribute to the literature on the relationship between GM&A and CER.