Probe - Accounting, Auditing and Taxation

Negative green innovation feedback and M&A deal termination risk in China

Ziqi Zhang

University of Shanghai for Science and Technology

DOI: https://doi.org/10.59429/paat.v8i2.14476

Keywords: green innovation; performance feedback; mergers and acquisitions; deal termination; China

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Abstract

This study examines whether negative green innovation performance feedback affects the resolution of announced mergers and acquisitions (M&A). Drawing on performance feedback theory, it argues that underperformance in green innovation can heighten managerial urgency during the post-announcement stage of a deal. In friction-laden transactions, however, such urgency may not speed completion; instead, it may intensify valuation, financing, due diligence, and regulatory problems. Using 36,316 announced M&A deals by Chinese A-share listed firms from 2010 to 2022, this paper applies Cox and cause-specific hazard models to deal duration data. The results show that negative green innovation performance feedback is not robustly associated with faster deal completion once controls are included, but is positively associated with a higher hazard of deal termination or withdrawal. The findings suggest that green innovation underperformance is more strongly associated with execution risk than with faster completion among already announced deals.

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References

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