Abstract: Using a unique panel of target firms in European countries, this paper examines how corporate social responsibility (CSR) affects employment policies after acquisitions. Surprisingly, I find that acquirers with greater CSR performance are more likely to lay off employees in target firms. My findings are primarily driven by the Social component of the CSR rating. I further document a positive impact of acquirers’ social performance on target firms’ labour productivity, technical efficiency, and staff costs. In addition, I show that socially responsible firms enjoy higher announcement returns, especially when they do more layoffs. These results are consistent with the cost-saving channel that higher labour costs induced by the implementation of CSR policies decrease the optimal level of employment in acquired targets. Overall, my paper suggests that socially responsible firms do not lose sight of value maximization when making layoff decisions.