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Open AccessArticle
The Impact of Mergers and Acquisitions on Firm Environmental Performance: Empirical Evidence from China
by
Thi Hai Oanh Le
Thi Hai Oanh Le and
Jing Yan
Jing Yan *
School of International Trade and Economics, Central University of Finance and Economics, Beijing 102206, China
*
Author to whom correspondence should be addressed.
Sustainability 2025, 17(15), 7018; https://doi.org/10.3390/su17157018 (registering DOI)
Submission received: 19 June 2025
/
Revised: 23 July 2025
/
Accepted: 30 July 2025
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Published: 1 August 2025
Abstract
In this study, we examine the impact of mergers and acquisitions (M&As) on firm environmental performance, aiming to address the gap in research and guide firms, investors, and policymakers toward more environmentally conscious decision-making in M&A. Using panel data from Chinese A-share listed firms (2008–2022), we estimate a two-way fixed effect model. The Propensity Score Matching and the instrumental variable method address potential endogeneity concerns, and robustness checks validate the findings. We found that M&As have a significantly positive effect on firm environmental performance, with heterogeneous impacts across regions, industries, and M&A types. The environmental benefits are most pronounced in heavily polluting industries and hybrid M&A deals. Eastern China shows more modest improvements. The results of mechanism tests revealed that M&As enhance environmental performance primarily by boosting total factor productivity and fostering innovation. This study offers a novel perspective by linking M&A activities to environmental sustainability, enriching the literature on both M&As and corporate environmental performance. We show that even conventional M&A deals (not sustainability-focused) can improve environmental performance through operational synergies. Expanding beyond polluting industries, we reveal how sector characteristics shape M&A’s environmental impacts. We identify practical mechanisms through which standard M&A activities can advance sustainability goals, helping firms balance economic and environmental objectives. It provides empirical evidence from China, an emerging market with distinct institutional and regulatory contexts. The findings offer guidance for firms engaging in M&A to strategically improve sustainability performance. Policymakers can leverage these insights to design incentives for M&A in pollution-intensive industries, aligning economic growth with environmental goals. By demonstrating that M&As can enhance environmental outcomes, this study supports the potential for market-driven mechanisms to contribute to broader societal sustainability objectives, such as reduced industrial pollution and greener production practices.
Share and Cite
MDPI and ACS Style
Le, T.H.O.; Yan, J.
The Impact of Mergers and Acquisitions on Firm Environmental Performance: Empirical Evidence from China. Sustainability 2025, 17, 7018.
https://doi.org/10.3390/su17157018
AMA Style
Le THO, Yan J.
The Impact of Mergers and Acquisitions on Firm Environmental Performance: Empirical Evidence from China. Sustainability. 2025; 17(15):7018.
https://doi.org/10.3390/su17157018
Chicago/Turabian Style
Le, Thi Hai Oanh, and Jing Yan.
2025. "The Impact of Mergers and Acquisitions on Firm Environmental Performance: Empirical Evidence from China" Sustainability 17, no. 15: 7018.
https://doi.org/10.3390/su17157018
APA Style
Le, T. H. O., & Yan, J.
(2025). The Impact of Mergers and Acquisitions on Firm Environmental Performance: Empirical Evidence from China. Sustainability, 17(15), 7018.
https://doi.org/10.3390/su17157018
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