Corporate Sustainable Strategies, Corporate Growth Value and Stock Price: An Analysis of Post-M&A Sustainable Growth Strategy through Balanced Scorecard Framework

Abstract

Many companies tend to choose corporate growth strategies that focus on their stock values and sales performances rather than corporate sustainable growth strategies that focus on intangibles. Mergers and Acquisitions (M?As) are often indispensable to corporate growth strategies and allow for the possibility of further expansion. However, as the case of Toshiba’s failed cross-border M&A has shown, a problem may lie with overseas subsidiaries. Investors’ concerns are raised when parent companies cannot fully control overseas subsidiaries. If the business performance of the acquiring company deteriorates, there is a possibility that a large amount of goodwill will turn into a loss. So, in the case of a company that has implemented an M&A, especially a cross-border M&A, attention towards sudden huge losses is amplified. Investors look for “M&A Adepts” which can be expected to generate profit growth through M&As.
Recently, Sustainable Development Goals (SDGs) have been adopted by the United Nations and compliance with them has become more expected. The Japanese Government Pension Investment Fund (GPIF) also became a signatory to the United Nations Principles for Responsible Investment (PRI) in 2016 and has steered its focus towards a greater emphasis on Environmental, Social and Governance (ESG) factors. Therefore, in order to maintain a stable stock price in the future, companies need to shift to a long-term, sustainable growth strategy that incorporates SDGs, especially post cross-border M&As. Taking SoftBank Group Corporation as an example, a company that possesses a large amount of goodwill among the top market capitalization companies in the first section of the Tokyo Stock Exchange (TSE), this study concludes that using the Balanced Scorecard (BSC) framework to shift from a growth strategy to a sustainable growth strategy is effective.