Green merger and acquisition decision driven by environmental regulation and its impact on green innovation: evidence from Chinese heavily polluting listed enterprises

Abstract

How heavily polluting enterprises achieve sustainable development has become an urgent issue to be solved. Based on the data of Chinese heavily polluting listed enterprises during the period of 2010–2020, this paper adopts the probit method to examine how heterogeneous environmental regulations affect green merger and acquisition (GMA) decision, and propensity score matching and difference-in-differences method to explore innovation performance of GMA. The findings are as follows: (1) Command-and-control environmental regulation (CMCER) can promote GMA, while there exists a U-shaped relationship between market-based environmental regulation (MBER) and GMA; (2) from a dynamic perspective, it turns out that GMA can promote green innovation (GI) in the first and second post-acquisition year, but this effect disappears in the third year; (3) compared with CMCER, MBER has a more pronounced positive effect on the relationship between GMA and GI; (4) heterogeneous analysis indicates that the above GMA performance is more persistent when the acquirer is state-owned, with high media attention, with high internal control or engages in vertical GMA. The findings further enrich the literature on GMA driver and performance and provide references for optimizing ER policies and promoting corporate sustainable development.

Research on the impact of green mergers and acquisitions of heavily polluting enterprises on the quality of environmental information disclosure: empirical evidence from listed companies in China

“…Thirdly, through grouping regression, it is found that in the year of green M&A, there is a significant positive relationship between green M&A and environmental information disclosure quality in both state-owned enterprise group and non-state-owned enterprise group, but the relationship between green M&A and environmental information disclosure quality in state-owned enterprise group is stronger. Consistent with the research of Fu et al (2022), Zhong and Peng (2022), Sun et al (2023a), they believe that green innovation has a stronger positive impact on state-owned enterprises and they are more willing to take environmental responsibility. However, Zhao et al (2021) believe that due to the natural political connection of state-owned enterprises, they can destroy legitimate interests and avoid illegal punishment, which leads to the weakening of the positive correlation between green M&A and corporate environmental governance.…”

“…Thirdly, previous studies have not reached a consensus on the moderating effect of property rights on the relationship between green M&A and environmental governance, green innovation (Sun et 2023a;Zhao et al, 2021). This study finds (hypothesis 3) that in the year of green M&A, the environmental disclosure quality of both state-owned and non-state-owned enterprises significantly improves.…”

“…However, firstly, in the research on green mergers and acquisitions and environmental management, scholars have not reached a consistent conclusion regarding their relationship. Some studies have found that green mergers and acquisitions are a sincere response by companies and can reduce environmental violations, promoting green innovation (Liang et al, 2022a(Liang et al, , 2022bSun et al, 2023a;Zhao et al, 2021), significantly improving the level of corporate green management. After green mergers and acquisitions, companies experience enhanced financing capabilities, increased government subsidies, and heightened public monitoring awareness, leading to increased environmental investment, utilization of green environmental technologies, construction of a green corporate image, and maintenance of a green reputation (Bai et al, 2019;Chun & Davies, 2010;Salahodjaev, 2018;Sun et al, 2023b;Tian & Lin, 2019).…”

Research on the Relationship Between Corporate Green M&A and Joint Institutional Investors

“…Currently, green M&A strategies (GMA) are mainly divided into two categories. One is the source emission reduction strategy, which is generally considered to be conducive to the green transformation of enterprises; the other is the terminal governance strategy, which is considered to be detrimental to the green transformation of enterprises [9]. The former refers to the use of green and environmentally friendly means by enterprises during production to reduce pollution emissions.…”

“…proceed below. [9] One possible hypothesis is the "market pressure hypothesis" [10]. In other words, media coverage increases corporate pressure and triggers management shortsightedness.…”