Studying Market Reactions to Fintech Acquisitions in North America and Europe: The Impact of Fintech Classification of Target Firms on the Acquirers’ Cumulative Abnormal Returns
This study examines the short-run effects of Fintech acquisition on the acquirer’s announcement returns, focusing on whether the impacts are moderated by the Fintech classifications of the target firm. With a total sample of 99 transactions conducted by 86acquirers from 2009 to 2018, it is documented that in general, Fintech acquisition generates value for the acquirers, consistent with some previous technological and Fintech acquisitions studies, i.e. Dranevet al. (2019), Maet al. (2019) and McCarthy & Aalbers (2016). Moreover, Fintech categories of the targets indeed have different influences on the acquisition performance.In specific, two of the most prominent classifications, namely alternative lending/investment technology and payments/billing tech,unexpectedly lower the short-term announcement returns of the acquirers. Oversupply of products, triggered by the strong competitions between players in these segments, are supposed to be the main driver of the negative returns. Secondly, the healthcare Fintech improves the bidder short-term announcement returns, and the gain is relatively high compared to the other categories. The technologies needed by both consumers and suppliers of healthcare are highly similar with the technologies required byusers of insurance. As such, healthcare-related Fintech companies are assumed to have characteristics that are very much alike with insurance providers. The most important trait is that the claims they have to pay are very few compared to the total funds they raise from premiums paid by clients. This is believed to be the reason behind the gains of the takeovers of healthcare Fintech.Meanwhile, the growing responsibility of consumers towards their healthcare costs, their constant search for higher transparencies in it, and the nations of observation where healthcare service is highly popular in developed nations, are believed to supportthe satisfyingperformance. This research also controls for many other determinants of the acquirer’s gains, ranging from deal-specific, firm-specific and financial data of the acquiring companies that are proposed by prior mergers and acquisitions (M&A) researchers. However, the only significant control variable is the relative deal size. It positively affects the acquirers’ CAR, indicating thatthe acquirer short-term returns increase in the relative size of deal values, supporting Asquith et al. (1983), Moeller etal. (2004), and Masulis et al. (2007).
|Thesis Advisor||Lemmen, J.J.G.|
Tanjung, A.S. (2020, March 17). Studying Market Reactions to Fintech Acquisitions in North America and Europe: The Impact of Fintech Classification of Target Firms on the Acquirers’ Cumulative Abnormal Returns. Business Economics. Retrieved from http://hdl.handle.net/2105/51771