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Fusing futures: Financial institutions’ stock price response to fintech acquisitions

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  • Kueschnig, Michael
  • Schertler, Andrea

Abstract

Traditional financial institutions are increasingly engaging in mergers and acquisitions (’M&As’) with financial technology (’fintech’) firms. Utilizing signaling theory, we argue that investors perceive an acquirer’s first fintech deal as a signal of commitment to a digitalized future. Our findings, based on 1681 fintech and nonfintech M&A deals, reveal that acquirers exhibit a significantly higher abnormal return for fintech deals than for nonfintech deals. This difference stems primarily from an acquirer’s first fintech deal. We rule out several alternative explanations, such as CEOs’ communication efforts to promote these deals. Consequently, a signaling effect seems likely.

Suggested Citation

  • Kueschnig, Michael & Schertler, Andrea, 2024. "Fusing futures: Financial institutions’ stock price response to fintech acquisitions," Finance Research Letters, Elsevier, vol. 59(C).
    • Handle: RePEc:eee:finlet:v:59:y:2024:i:c:s1544612323011510
    DOI: 10.1016/j.frl.2023.104779
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    More about this item

    Keywords

    Fintech; Event study; Stock price response; First deal;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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