Green M&A, legitimacy and risk‐taking: evidence from China’s heavy polluters

Green merger and acquisition (M&A) activities may improve heavy polluters’ regulatory and organisational legitimacy, allowing greater access to resources and enhancing risk‐taking capacity. Adopting a proprietary 2008–2013 dataset, we examine outcomes from green M&A for China’s heavy‐polluting firms. We find that heavy polluters’ green M&A is associated with greater risk‐taking. Greater access to resources, and reduced financing constraints and tax liabilities suggest improved legitimacy. These effects are positively related to state ownership and government intervention in the M&A process. Our findings support the Porter hypothesis and have policy implications for green management of heavy polluters in emerging markets.