Untangling ESG in Private Equity: Do ESG Commitments Affect Target Firm Choice in LBOs?

Loading...
Thumbnail Image
Degree type
Graduate group
Discipline
Subject
esg
private equity
corporate social responsibility
csr
institutional investors
active investors
lbo
reprisk
pri
esg ratings
corporate finance
Corporate Finance
Funder
Grant number
License
Copyright date
Distributor
Related resources
Contributor
Abstract

Scholars have conducted various studies looking at the impact of ESG commitments on public market investors' investment strategies and portfolio compositions, but insights on Private Equity (PE) funds remain to be explored. The lack of transparency in PE and well-established ESG measurement tools pose significant challenges. This paper looks at 390 LBO transactions and the target firms' respective RepRisk ESG risk ratings to uncover whether buyout preferences shift towards lower ESG-risk firms once a PE fund makes ESG commitments. The results from this study find positive (increase in risk exposure) but insignificant effects on the ESG risk rating of new acquisitions post-commitment. Confounding due to factors such as time and industry are addressed, but the results exist under multiple data constraints. This finding might reflect a bias in the selected sample since the analysis may already be restricting it to firms with strong ESG ratings acquired by established PE funds.

Advisor
Maisy Wong
Date of degree
2021-05-04
Date Range for Data Collection (Start Date)
Date Range for Data Collection (End Date)
Digital Object Identifier
Series name and number
Volume number
Issue number
Publisher
Publisher DOI
Journal Issue
Comments
Recommended citation