From carbon footprints to global footprints: unraveling the link between carbon emissions and cross-border M&As

This paper explores cross-border mergers and acquisitions (M&As) as the major form of corporate foreign direct investments and their impact on corporate carbon emissions. Using a large sample of Chinese publicly listed firms, we find that cross-border M&As generate a positive spillover effect by reducing Chinese acquirers’ post-merger carbon emissions. Also, Chinese acquirers’ commitment on carbon emissions reduction is accompanied with superior post-merger financial performance. Our cross-sectional analyses unveil that the positive spillover effect is more pronounced in energy-related industries and with the presence of foreign institutional investors whereas is attenuated by political connections. Furthermore, we find that the firms with mitigated post-merger carbon emissions substantially enhance their investments on environmental protection as well as receive more government green subsidies specifically targeting carbon emissions reduction.