ABSTRACT
Past research using event-study methodology suggested that major political events such as parliamentary elections and Brexit affected the abnormal returns of equities. However, past research did not investigate the impact of the declaration of national emergency by President Trump during the Covid-19 pandemic on the abnormal returns of Fintech digital payment companies. Because of the pandemic and its subsequent social distancing measures, many governments, businesses, schools, and organizations have shut down their brick-and-mortar presence and moved their operations online. Fintech companies are expected to benefit from such migration to online operations. This study hypothesizes that Fintech companies enjoy higher abnormal returns in response to the national emergency declaration during the Covid-19 pandemic. However, this study’s findings cannot reject the null hypothesis that the abnormal returns of Fintech digital payment companies are zero in the week following the declaration of national emergency. This finding implies that the US equity markets are efficient in the dissemination of the news about the national emergency as there is no statistically significant difference between the actual returns of the digital-payment equities and their predicted returns based on the CAPM model. Copyright © 2022 GMP Press and Printing