Green mergers and acquisitions in corporate low-carbon transition: A driving mechanism based on dual external pressures

In response to the escalating challenges of climate change and carbon emissions, China introduced its Low-Carbon City Pilot (LCCP) policy in 2010, aiming to foster green economic transitions through localized low-carbon development initiatives. Based on this policy and utilizing M&A data from Chinese listed companies between 2007 and 2023, this paper examines its critical role in promoting green mergers and acquisitions (GMA). The results show that the LCCP generates dual external pressures—by increasing government environmental regulation and raising public environmental awareness—which drive companies to enhance their environmental compliance through green M&A. Heterogeneity tests indicate that the policy’s effect on promoting green M&A is more pronounced in mature firms, state-owned enterprises, firms in heavily polluting industries, and firms located in non-resource-based cities. Furthermore, the analysis reveals that while green M&A positively impacts green innovation, external policy pressures lead to a “crowding-out effect,” where strategic responses to these pressures limit green innovation investment.