Is the sustainability profile of FinTech companies a key driver of their value?

Abstract

• Financial industry has evolved due to the disruptive innovation and technologies • This work studies the effect of the sustainability profile of Fintech companies • Methodology is based on dynamic (GMM-SYS) and static (PCSE) panel data models • Fintech firm value is driven by rankings or green certificates • Sustainability effort decreases as market capitalization increases - agency problem The digitisation process is affecting all markets and raising consumer awareness about companies’ sustainable behaviour. This work studies the effect of the sustainability profile of FinTech companies on the firm (market value and book value) as the factors that add value to investors and motivate their evolution in markets are still unknown. Using the KBW and Nasdaq FinTech Indices, and the NASDAQ Insurance Index (IXIS), we composed a panel of 95 companies over a 10-year period (2010–2019) with economic-financial variables and data about green certificates and sustainability indices. The applied methodology is based on dynamic (GMM-SYS) and static (PCSE) panel data models. Our results show that the market value of FinTech companies is positively driven by an CSR report being issued, the position in the CSR RepTrak, company size and board size. In contrast, the number of green certificates, particularly their position in the Green Ranking, is negatively related to their market value. Surprisingly in the most transparent companies, the direction of the variables effect evidenced for the book value per share is the opposite to market capitalisation.