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Blockchain speculation or value creation? Evidence from corporate investments
Author(s) -
Autore Don M.,
Clarke Nicholas,
Jiang Danling
Publication year - 2020
Publication title -
financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.647
H-Index - 68
eISSN - 1755-053X
pISSN - 0046-3892
DOI - 10.1111/fima.12336
Subject(s) - blockchain , speculation , mainstream , business , stock price , credibility , shareholder value , shareholder , investment (military) , accounting , value (mathematics) , stock (firearms) , monetary economics , finance , economics , corporate governance , mechanical engineering , paleontology , philosophy , computer security , theology , engineering , machine learning , series (stratigraphy) , politics , computer science , political science , law , biology
Many corporate executives believe blockchain technology is broadly scalable and will achieve mainstream adoption, yet there is little evidence of significant shareholder value creation associated with corporate adoption of blockchain technology. We collect a broad sample of firms that invest in blockchain technology and examine the stock price reaction to the “first” public revelation of this news. Initial reactions average close to +13% and are followed by reversals over the next 3 months. However, we report a striking difference based on the credibility of the investment. Blockchain investments that are at an advanced stage or are confirmed in subsequent financial statements are associated with higher initial reactions and little or no reversal. The results suggest that credible corporate strategies involving blockchain technology are viewed favorably by investors.