This paper investigates the influence of stakeholder orientation on firms’ acquisition intensity. We depart from prior literature and argue that the heterogeneity in the extent to which firms account for the interests of their stakeholders can affect their acquisition decisions. We study our research question using a difference-in-difference methodology and exploiting the staggered adoption of constituency statutes, which enabled managers to account for non-shareholding stakeholders’ interests in their decisions. Our preliminary results, based on a sample of 4,241 U.S.-based, publicly listed firms from 1990 to 2015, provide evidence consistent with our predictions that increased stakeholder orientation reduces firms’ acquisition intensity. We further show that this effect is stronger for related vs. unrelated acquisitions. Our additional analyses also reveal that stakeholder-oriented firms grow organically rather than via other growth mechanisms and abstain from entering unfamiliar operating locations.
