| dc.description.abstract | In this master thesis, we study the role of carbon risk in acquisition decisions and how it
is related to announcement returns. We analyze the likelihood of cross-border acquisitions
based on certain industry and target country characteristics. We find that acquirers
with higher levels of emissions are more likely to engage in cross-border acquisitions
in countries with lower financial performance (GDP), governance, and environmental
regulations. For industries where emissions are a material issue, we find that acquirers
with higher levels of emissions are more likely to acquire a foreign target relative to a
domestic target. These findings suggest that acquirers use cross-border acquisitions as a
strategy to reduce carbon risk by moving emissions abroad. Additionally, we study the
relationship between announcement returns and carbon risk in cross-border acquisitions.
After controlling for endogeneity, we find that capital markets reward acquiring targets in
countries with low financial performance (GDP), and low governance standards. We find
that acquirers with higher levels of emissions in a material industry, are associated with
higher acquisition announcement returns when engaging in cross-border acquisitions. Our
study thus contributes to existing literature with a further understanding of the role of
carbon risk in acquisition decisions. | en_US |
