Does corporate ESG create value? New evidence from M&As in China

Using a large sample of Chinese companies' domestic M&A, this study provides new evidence on the financial payback of corporate ESG and its dynamics. We find that acquirers' ESG rating is positively correlated to post-M&A performance and deal completion likelihood. Additionally, we find the relationship between acquirer's ESG dynamic and post-M&A performance is contingent on the firm's previous ESG standards. Overall, these findings are in line with the instrumental stakeholders' view that high ESG performance could earn support from stakeholders for post-M&A synergy creation and emphasize the asymmetric marginal outcome of firms' ESG efforts as a result of diminishing marginal utility of stakeholders.