Mergers & Acquisitions and ESG : The impact of ESG characteristics on the Takeover Premium
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- Master Thesis 
This master’s thesis attempts to identify the value of ESG scores through the willingness of acquirers to pay a premium for ESG scores in M&A transactions. As the world is working to become climate friendly through international agreements such as the Paris Agreement, as well as supranational entities requiring companies to reduce their carbon footprint through regulations, ESG scores should become increasingly important when assessing the true value of a company. This thesis uses data from Thomson Reuters from 2007 to 2020 combined with ESG scores. The models employed attempt to isolate the effects of ESG Scores by controlling for other factors determining the takeover premium in M&A transactions, as well as controlling for country-specific effects on the ESG score. The result of this thesis is that there is no significant effect of ESG scores on takeover premiums in M&A transactions when controlling for EBITDA margin, D/E ratio, Valuation, Toehold, and cross-border takeover. Furthermore, no impact from country-specific effects could be measured when controlling for this factor through two-stage least squares. These findings are different from previous studies on the field of ESG and value creation as other papers have found a positive relationship. This thesis looks into possible explanations for the absence of a link between ESG and takeover premium but must be interpreted with caution as the sample sizes used are small.