How Fintech drives corporate M&A?

This study analyzes the impact of Fintech on corporate mergers and acquisitions (M&A) using data from Chinese A-share listed firms between 2011 and 2020. The findings indicate that firms located in cities with higher levels of Fintech adoption are more inclined to undertake more M&A activity, particularly among non-state-owned enterprises, smaller-sized firms, high-tech (technology-intensive) firms, non-heavy-polluting firms, and firms in the growth and maturity stages. Mechanism analysis reveals that Fintech promotes corporate M&A by alleviating financial pressure, reducing information asymmetry, and strengthening supply chain stability. Furthermore, we find that Fintech promotes firms’ green M&A, M&A deal size, and long-term M&A performance, but has no significant effect on short-term M&A performance. We also find that acquirer AI adoption amplifies, whereas acquirer managerial myopia and government economic policy uncertainty weaken, the impact of Fintech on corporate M&A. Ultimately, we find that M&A increases firms’ idiosyncratic risk, while Fintech mitigates this adverse effect. Overall, this study not only deepens the understanding of the economic consequences of Fintech but also provides important practical implications for how firms can leverage digital transformation to support strategic expansion and how regulators can assess the systemic impact of Fintech.