Tainted Deals: Impact of Corporate Social Irresponsibility on the Acquisition Costs

Abstract

 This study examines the corporate social irresponsibility (CSI) impact on merger and acquisition (M&A) outcomes. Its specifically focuses on the cost of acquisition and time to complete the deals. Prior studies have extensively explored the positive impact of corporate social responsibility (CSR) on stakeholder relations and value of the firms. This gap has been filled by this study by employing Chinese firms’M&As data from 2008-2024. By drawing the resource-based view, the study has examined that how M&As outcomes are affected by the heightend CSI and in conjunction with CSR. Moreover, the study also investigated the M&As outcomes by applying three moderators i.e. (i)concurrent CSR, (ii) same domain CSR, and (iii) market dynamics. Refinitiv WorldScope, and DataStream are used for drawing the data and results of the study indicate that CSI has negative impact on the cumulative abnormal returns of the acquirer. Furthermore, CSR activities of the acquirer lower the adverse effects of CSI. This study offers valuable insights for policymakers and corporate executives.