Climate change exposure and M&A: global evidence

Xue, Y., Bin Hasan, S. ORCID: https://orcid.org/0009-0001-4827-1964 and Kabir, M. (2026) Climate change exposure and M&A: global evidence. Journal of International Financial Markets, Institutions and Money, 111. 102356. ISSN 1873-0612 doi: 10.1016/j.intfin.2026.102356

Abstract/Summary

We present global evidence on the effect of climate change exposure (CCE) on mergers and acquisitions. We find that firms facing higher CCE exhibit a reduced propensity to engage in M&A, and experience a decrease in deal numbers and value. We adopt several identification strategies to mitigate endogeneity concerns. Our results indicate that the cost of financing and cash holdings explain this negative relationship. The effect is more concentrated within Anglo-Saxon nations, especially those characterized by advanced economic development and market-oriented institutional frameworks. We also find that firms proactively engage in sustainable practices to mitigate such adverse impacts of CCE. Finally, firms with higher climate change exposure also take longer to complete deals, earn insignificant announcement returns, and exhibit poor operating performance. Overall, our study highlights the importance of considering climate change in M&A decision-making.

Item Type	Article
URI	https://centaur.reading.ac.uk/id/eprint/129791
Identification Number/DOI	10.1016/j.intfin.2026.102356
Refereed	Yes
Divisions	Henley Business School > Finance and Accounting
Publisher	Elsevier
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