Do Acquiring Firms Maintain Targets’ Superior CSR and Remedy Targets’ CSR Problems?

We study whether acquiring firms’ managers are likely to maintain (support) or dismiss the target’s superior CSR and whether they are likely to remedy or disregard the target’s CSR problems in the post-acquisition process. We hypothesize that acquirers pay selective attention to the targets’ CSR dimensions (community, diversity, employee, environment, and product) and they prefer to dismiss the target’s superior CSR in community, diversity, and employee dimensions, whereas they are likely to maintain (support) targets’ superior CSR in environment and product dimensions in favor of potential financial benefits. We also hypothesize that they are likely to disregard or overlook the targets’ CSR problems in all five CSR dimensions, which carry over to the combined firm in the post-acquisition integration process. Using a sample of 456 acquisition cases in the U.S. market in 1995-2010, we confirmed our hypotheses.