Drawing on the organizational stigma literature, this study examines the role of event-based stigma in influencing foreign acquirers’ propensity to use conduit acquisitions—acquisitions initiated through a subsidiary. We argue that actions of corporate social irresponsibility (CSI) constitute stigma-triggering events that attract stakeholders’ attention and activate a social evaluation process that risks imposition of social and economic sanctions, which make it more difficult for acquirers to operate successfully in the host country. Conduit acquisitions represent a calculated response to event-based stigma and are used by acquirers to decouple the cross-border acquisition (CBA) from the stigmatizing event(s) and improve the CBA’s prospects. However, not all acquirers with event-based stigma may choose to adopt conduit acquisitions due to their visibility. Consequently, we argue that the foreign acquirer’s public status and the size of the acquisition moderate the effect of event-based stigma on the probability of conduit acquisitions. Our analysis of 31,655 acquisitions by 13,899 unique ultimate acquirers provide support for our hypotheses offering novel insights into the conditions under which conduit acquisitions are adopted.
