Abstract 

Purpose- The purpose of this research is to investigate the relationship between economic policy uncertainty (EPU) and merger and acquisition (M&A) performance. This paper explores how EPU affect the performance of the firm participating in the M&A deals. Moreover, it also examines the moderating role of environmental, social and governance (ESG) scores on the above established relationship. 

Design/ methodology/ approach- This paper uses ordinary least square regression to analyse the data of 4214 deals from emerging nations. The data is taken from Bloomberg and was gathered for the period between 2010-2022. To test the validity and reliability of the results additional set of comprehensive tests are also performed.

Findings- The empirical findings of the study suggest that sample firms perform better and gives higher returns to their investors amid high EPU. This can be due to the fact that firms only invest in high profit yielding mergers during high EPU. Managers become more conservative with investments. Moreover, M&A can be used as risk mitigation strategy amid uncertainty in the environment. 

Originality/ value – The authors extend the literature on the effect of EPU on M&A performance in emerging economies. Unlike existing studies, the focus of this study is on developing nations. As literature dictates that developing nations are different from developed once. Apart from uncertainty, the authors make a new contribution to the literature on the moderating role of sustainability on the association between EPU and M&A performance.