The seminar will be held via Teams on November 6th from 3pm - 4:15pm (contact: bs-research@abdn.ac.uk for link).
Join Dr Stefano Maiani, Assistant Professor of Finance at Heriot-Watt University.
Abstract:
This article explores how private equity (PE) firms incorporate information on their portfolio companies' sustainability when making investment decisions. We examine this by analysing the relationship between environmental and social (E&S) incidents experienced by the firms in our sample and the likelihood of a PE leveraged buyout (LBO). Moreover, we investigate whether PE firms publicly committed to responsible investment, through their signatory status with the UN Principles of Responsible Investment (PRI), make different investment decisions compared to their non-PRI counterparts. We utilise Reprisk data on E&S incidents experienced by a global sample of public firms from 2007 to 2020, which we combine with information on PE LBOs obtained from Thomson Financial SDC Mergers and Acquisitions Database and financial data from Compustat. Our findings suggest that E&S incidents, particularly those of low severity, increase the likelihood of an LBO, likely due to a valuation channel where such incidents lead to the temporary undervaluation of target firms. This effect is more pronounced among non-PRI signatories, indicating that PE firms publicly committed to responsible investment tend to "walk the talk".
- Speaker
- Dr Stefano Maiani
- Hosted by
- University of Aberdeen Business School
- Contact
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No booking required.