The Impact of Cross-Border Mergers and Acquisitions on ESG Rating Divergence

The findings show that cross-border M&As significantly exacerbate ESG rating divergence. Mechanism analyses further reveal that this effect operates through two main channels: a decline in information disclosure quality and an increase in analyst coverage.

The moderating effect analysis indicates that digital transformation and executives with overseas experience can effectively mitigate this amplifying effect. Heterogeneity analysis shows that the effect is more pronounced among non-state-owned enterprises, manufacturing firms, and firms facing high financing constraints. Further analysis demonstrates that ESG rating divergence significantly reduces institutional ownership and increases the cost of equity capital.