| Author: | Zhou, Yaotang |
| Title: | The impact of ESG rating disagreement on mergers and acquisitions |
| Advisors: | Wu, Qiang (AF) Tong, Wilson (AF) |
| Degree: | D.B.A. |
| Year: | 2026 |
| Subject: | Consolidation and merger of corporations Social responsibility of business -- Environmental aspects Hong Kong Polytechnic University -- Dissertations |
| Department: | Faculty of Business |
| Pages: | vii, 117 pages |
| Language: | English |
| Abstract: | Along with the growing importance of ESG, ESG rating is widely used as non-financial information by acquirers and market participants in M&A deals which are significant economic activities of companies. However, different ratings from various ESG rating agencies have been a topic of great concern. In this research, I investigate the influence of ESG rating disagreement of target firms on M&A deal execution process (speed, payment method, premium), using data from 1,518 deals between the year 2013 and 2024. Contrary to established financial theories, which posit that uncertainty prolongs investment decisions, our empirical analysis reveals that greater ESG disagreement is associated with a significantly shorter M&A deal completion time, providing robust support for the "Preemptive Speed" hypothesis. Additional analyses reveal that the acceleration effect is driven by cash-financed, high-stakes (large size), low-friction (domestic) transactions. These findings suggest that sophisticated acquirers leverage private due diligence to identify undervalued targets amidst public market confusion, prioritizing speed to "lock in" value rather than delaying for extensive verification. Besides, my study finds no statistically significant impact of ESG rating disagreement on the choice of payment method (cash vs. stock) or the magnitude of takeover premiums, indicating acquirers do not perceive ESG disagreement as a fundamental "valuation risk" that necessitates risk-sharing through equity payments or a protective price discount. This study contributes to the literature by demonstrating that ESG information asymmetry can serve as a catalyst for informational arbitrage rather than solely as a transaction friction. This study also extends the boundary of research on non-financial information and M&A efficiency. |
| Rights: | All rights reserved |
| Access: | restricted access |
Files in This Item:
| File | Description | Size | Format | |
|---|---|---|---|---|
| 8947.pdf | For All Users (off-campus access for PolyU Staff & Students only) | 830.18 kB | Adobe PDF | View/Open |
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