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Environmental innovation and takeover performance

Tanveer Hussain, Tunyi Tunyi Abongeh Orcid Logo, Geofry Areneke

Business Strategy and the Environment

Swansea University Author: Tunyi Tunyi Abongeh Orcid Logo

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DOI (Published version): 10.1002/bse.3822

Abstract

Drawing from the resource-based view (RBV), we examine the effect of environmentalinnovation on mergers and acquisitions (M&As) announcement returns. Using aninternational sample of M&As for the period 2003 to 2021 and an event study methodology,we document that acquirers with higher environ...

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Published in: Business Strategy and the Environment
ISSN: 0964-4733 1099-0836
Published: Wiley 2024
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URI: https://cronfa.swan.ac.uk/Record/cronfa66468
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Abstract: Drawing from the resource-based view (RBV), we examine the effect of environmentalinnovation on mergers and acquisitions (M&As) announcement returns. Using aninternational sample of M&As for the period 2003 to 2021 and an event study methodology,we document that acquirers with higher environmental innovation — innovativeacquirers — earn average deal announcement abnormal returns that are 0.10 to 0.50percentage points higher than those earned by their non-innovative counterparts. Theseresults are consistent across three important forms of environmental innovation (i.e.,product, process and organizational innovation) and are partly explained by the transferof environmental innovation from the acquirer to the target. We further find thatenvironmentally innovative acquirers are more likely to engage in majority control andcross-border acquisitions, thus emphasizing the transfer effect. Overall, we contributeto RBV by providing evidence that environmental innovation is a distinctive resource ordynamic capability that is transferable from bidders to targets in the takeover market.
Keywords: Announcement returns, environmental innovation, international M&As, resource based view
College: Faculty of Humanities and Social Sciences

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