When a company faces the prospect of a hostile takeover, its board may reach for traditional anti-takeover defences. “Poison pills,” for instance, allow existing shareholders to buy additional shares at a discount, diluting a would-be acquirer’s stake and making the target more expensive to absorb.

Hostile takeovers occur when one company attempts to acquire another against the wishes of the target’s board of directors, typically by purchasing a majority of its shares on the open market. They are, by design, adversarial, and the defences against them have historically been financial and legal.

But a growing body of research points to a more preventive kind of protection: a company’s performance on environmental, social and governance (ESG) measures. Businesses are legally required to invest in ESG initiatives to offset any harm they cause and to contribute to a net positive for our world at large.

While companies rarely frame ESG investment in these terms, a recent study by me and my colleagues suggests that’s part of what’s happening, and that the effects extend well beyond the firms under direct threat.

What the research found

To examine the relationship between ESG investment and hostile takeover........

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