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The impact of fintech M&A on stock returns

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  • Dranev, Yury
  • Frolova, Ksenia
  • Ochirova, Elena

Abstract

Technological development and digitalization plays a crucial role in financial sector by allowing firms to create value in a rapidly changing environment. The acquisitions of firms related to financial technologies are one of the ways to obtain vital knowledge. In order to identify the fintech companies we are looking at firms that are involved in business activities in both the IT and financial sectors. By examining the growing role of fintech firms in the recent mergers and acquisitions from an investor point of view, this paper contributes to the existing literature by investigating the post-acquisition performance of the acquirer firms measured by abnormal returns. We discovered significant positive average abnormal return after acquisition of fintech companies in the short-term and negative average abnormal return in the long-term using event study methodology. The specifics of cross-border acquisitions, the level of the domestic market development of the acquirer, and other characteristics of M&A deals are considered in order to explain the reaction of investors to announcements of fintech firms’ acquisitions. The determinants of corresponding M&A deals in emerging and developed markets were revealed.

Suggested Citation

  • Dranev, Yury & Frolova, Ksenia & Ochirova, Elena, 2019. "The impact of fintech M&A on stock returns," Research in International Business and Finance, Elsevier, vol. 48(C), pages 353-364.
    • Handle: RePEc:eee:riibaf:v:48:y:2019:i:c:p:353-364
    DOI: 10.1016/j.ribaf.2019.01.012
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    More about this item

    Keywords

    Financial technologies; Mergers and acquisitions; Stock returns; Event study; Cross-border M&A;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • F20 - International Economics - - International Factor Movements and International Business - - - General

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