Does sustainability matter for Fintech firms? Evidence from United States firms

Abstract

Purpose

This study aims to look at how financial technology (FinTech) companies adhere to sustainable standards in contrast to their counterparts. Following the validation of its new sustainability index, this study looks into the impact of sustainability on the stock performance of FinTech companies.

Design/methodology/approach

To efficiently test the hypotheses, sample has been collected from the Bloomberg of all FinTech and non-FinTech companies from the USA. The final sample comprises 1,712 company-year observations over the investigation period 2010–2019. The methodology entails ordinary least squares regressions and generalized panel methods of moments (GMM).

Findings

The results suggest that the developed sustainability index is a valid proxy for sustainability measures and directly relates to stock performance. Besides, the evidence indicates that non-FinTech companies display superior sustainability and stock performance compared to FinTech companies. The present results corroborate with stakeholder theory, which implies that quality sustainability performance will alleviate the agency issue and safeguard the shareholders’ interest.

Research limitations/implications

Despite the fact that it presents the limitation of not considering other dimensions of financial performance, this research is important as it highlights the sustainability practices by the FinTech and non-FinTech companies, offering insights to researchers, policymakers, regulators, financial reports users, investors, environmental union, employees, clients and society.

Originality/value

This paper is novel because it is unique in evaluating the sustainability practices in FinTech and non-FinTech firms.

Citation

Najaf, K., Haj Khalifa, A., Obaid, S.M., Rashidi, A.A. and Ataya, A. (2023), "Does sustainability matter for Fintech firms? Evidence from United States firms", Competitiveness Review, Vol. 33 No. 1, pp. 161-180. https://doi.org/10.1108/CR-10-2021-0132