Racing to the TOP?: Acquisitions as a Vehicle for Improved Environmental Performance in Mexico

Abstract

This article presents evidence which suggests that a “race to the top” is happening, as opposed to a “race to the bottom” with regard to environmental protection in the globalized world. The article analyses how environmental compliance influences mergers and acquisitions in Mexico. It presents new data on environmental compliance in relation to foreign investment in Mexico and asks whether the nationality of businesses affects the level of compliance. The evidence found suggests that as a consequence of the North American Free Trade Agreement, environmental legislation and compliance has improved. In addition, the evaluation of the level of soil contamination has proven to be an important factor in the acquisition of Mexican companies or subsidiaries of companies settled in Mexico.