Sustainability, market performance and FinTech firms

Abstract

Purpose The purpose of this paper is to provide empirical evidence on the suitability of a Bloomberg Environmental (E), Social (S) and Governance (G) (ESG) disclosure index designed for companies from the USA and to investigate the sustainability quality and stock performance of FinTech companies. Design/methodology/approach Data from all FinTech and non-FinTech firms in the USA was acquired from Bloomberg to undertake the study and evaluate the suggested hypotheses efficiently. The final sample consists of 1,672 company-year observations from 2010 to 2019. The methodology used ordinary least squares regressions of performance metrics on the Bloomberg ESG disclosure index and its components. Findings The findings indicated that the Bloomberg ESG disclosure index is a valid proxy for sustainability and has a direct relationship with stock performance. Furthermore, this study suggests that non-FinTech firms outperform FinTech firms in sustainability and stock performance. The findings support stakeholder theory, which suggests that increased disclosure of ESG information will mitigate the agency problem and protect shareholders’ interests. Research limitations/implications This study’s findings were significant because the findings emphasised ESG disclosure in FinTech and non-FinTech firms, providing information to academics, legislators, regulators, financial report users, investors, environmental unions, workers, customers and society. Originality/value This research is unique as it evaluates ESG practices in both FinTech and non-FinTech firms.