FinTech, Corporate Governance, and Firm Performance: Panel Evidence from Listed Financial Firms

Abstract

Financial technology (FinTech) is transforming the way banks, insurers and asset managers play the game, but it is not clear whether the massive investment in technology is rewarding the firms' performance and what role corporate governance is playing in converting the technology into returns. This study uses a balanced panel of 120 listed financial firms observed from 2015 to 2024 (1,200 firm-years). There is a relationship between a disclosure-based FinTech adoption index and a six-component governance index and return on assets (ROA), return on equity (ROE), and Tobin's Q, with system GMM as a robustness check. The governance quality is positively related to all three performance measures, as is the adoption of FinTech (one year behind). The governance moderation of the FinTech effect is also robust: a one-standard-deviation increase in governance is associated with roughly a third more of the ROA payoff from FinTech, with the moderation driven by independent boards, independent audit committees and separation of the CEO and chair, but not by the size of the board or its ownership structure. This outcome implies that value creation is limited to well-governed firms when it comes to FinTech.

Keywords: FinTech, corporate governance, firm performance, digital transformation, board independence, panel data