Does CSR impact premiums in M&A transactions?

Studies linking corporate social responsibility (CSR) to the market value of firms for marginal investors have found mixed evidence. However, the case of strategic acquirers has scarcely been analyzed. We investigate whether CSR is valued by acquirers in mergers and acquisitions (M&A) and find that CSR is positively associated with bid premiums. Interestingly, while environmental performance is generally valued by acquirers, social performance only commands a premium in cross-border transactions. Our findings suggest that acquirers value targets' CSR involvement and may consider it as a way to reduce information asymmetry and targets' specific risk.