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

Hao Li, Yue Liu, Bing Xu

Research output: Contribution to journalArticlepeer-review

4 Citations (Scopus)
30 Downloads (Pure)

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.
Original languageEnglish
Article number118439
JournalJournal of Environmental Management
Volume344
Early online date24 Jun 2023
DOIs
Publication statusPublished - 15 Oct 2023

Keywords

  • All-cash offer
  • Climate risk
  • Cross-border mergers and acquisitions
  • Payment methods

ASJC Scopus subject areas

  • Waste Management and Disposal
  • Management, Monitoring, Policy and Law
  • Environmental Engineering

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