Title: Mispriced Green? Climate Regulation and Takeover Opportunities

Speaker: Ni Xiaoran, Professor, Central University of Finance and Economics

Time: 10:00-11:30, December 18th, 2025 (Thursday)

Venue: Room 1007, Mingde Business Building (Zhongguancun Campus)

Language: Chinese & English

ABSTRACT:

We examine how climate regulation affects the domestic market for corporate control. We find that climate regulation significantly increases the probability that a firm becomes a takeover target by 3.1 percentage points, a 155% rise relative to the sample mean. This effect is not driven by the acquisition of financially vulnerable, high-exposure firms. Instead, the increase in M&A activity is concentrated among fundamentally strong firms that become temporarily undervalued due to market-wide information frictions following the regulatory shock. Acquirers appear to exploit these pricing discrepancies, with the effect being strongest for cash-financed, cross-industry deals that earn positive announcement returns. Our findings imply that the takeover market can act as an important mechanism to correct mispricing due to climate regulatory risks.