The Effects of Corporate Social Responsibility on Overseas Mergers and Acquisitions

Abstract

This survey studies the effects of corporate social responsibility (CSR) on overseas mergers and acquisitions (overseas M&As) on acquirers’ corporate social responsibility (CSR) using a sample of Ghana multinational firms and MBA students. This study reveals that firms with overseas M&A activities experience an improvement in CSR performance during the post-acquisition period, and this positive effect is more distinctive when the acquisition of targets is from developed markets than from emerging or low-quality markets. Besides, acquirers significantly improve CSR performance following their overseas acquisitions, suggesting that acquirers initiate efforts to improve CSR performance to gain legitimacy in host countries. The study equally finds that host country legal origins, social norms, and the acquirers’ exposure to multiple jurisdictions hold the keys to improving the CSR performance of acquirers. The results appear robust and valid to various measures of CSR and are effective when endogeneity concerns are addressed. Further analyses disclose that overseas M&A firms with high CSR performance show greater CSR initiatives. Overall, our findings add to the field of literature on the influence of legal and social norm origins on shaping stakeholder-oriented practices by showing how overseas M&As may aid as a critical channel through which overseas acquirers bond themselves to the better CSR practices of the host countries.

Keywords: Corporate Social Responsibility, Mergers and Acquisitions and Overseas Investment

DOI: 10.7176/EJBM/13-6-15

Publication date:March 31^st 2021