Can green technology mergers and acquisitions enhance sustainable development? Evidence from ESG ratings

Abstract In order to better understand the impact of green technology mergers and acquisitions (GTMA) on sustainable development, the difference‐in‐differences model is applied to investigate the direct impact and underlying mechanisms of GTMA on the environment, society, and governance (ESG) in China. Additionally, we established a two‐dimensional framework of “market versus government” to analyze the heterogeneity. The results show that: (1) GTMA is positively aligned with greater ESG performance, indicating that GTMA is an effective way to enhance sustainable development. (2) GTMA fosters ESG performance by boosting green subsidies (i.e., signal transmission channel), lowering financing costs (i.e., impression management channel), and enhancing green innovation (i.e., technology synergy channel). (3) The positive relationship is largely dependent on the collaborative supervision environment (i.e., “strong” market and “strong” government) and the appropriate policy environment (i.e., “big” market and “small” government). (4) Furthermore, GTMA carries significant spillover effects, with other enterprises in the same industry improving their ESG performance. Additionally, this paper proposes targeted directions for the government and enterprises to take advantage of GTMA dividends to realize superior ESG performance.