Bitcoin Speculation or Value Creation? Corporate Blockchain Investments and Stock Market Reactions

41 Pages Posted: 23 Jul 2019

See all articles by Don M. Autore

Don M. Autore

Florida State University - College of Business

Nicholas Clarke

Florida State University - Department of Finance

Danling Jiang

College of Business, Stony Brook University

Date Written: May 1, 2019

Abstract

We study the stock price reaction to the first public news that a firm is investing in blockchain technology. The initial reaction averages close to +15% and is followed by a reversal over the next three months. However, reactions differ substantially based on the credibility of the investment and investors’ speculative tendencies. Investments associated with lottery-type stocks and higher investor attention and sentiment exhibit higher initial reactions but are followed by significant reversals. Blockchain investments that are at an advanced stage or confirmed in subsequent financial statements, however, are associated with higher initial reactions and little or no reversal.

Keywords: Blockchain; Bitcoin; Cryptocurrency; Investor sentiment; Lottery-type features

JEL Classification: G10, G14, G30, G32

Suggested Citation

Autore, Don M. and Clarke, Nicholas and Jiang, Danling, Bitcoin Speculation or Value Creation? Corporate Blockchain Investments and Stock Market Reactions (May 1, 2019). Available at SSRN: https://ssrn.com/abstract=3385162 or http://dx.doi.org/10.2139/ssrn.3385162

Don M. Autore (Contact Author)

Florida State University - College of Business ( email )

821 ACADEMIC WAY, Room 314 RBA
P.O. Box 3061110
Tallahassee, FL 32306-1110
United States
850-644-7857 (Phone)

Nicholas Clarke

Florida State University - Department of Finance ( email )

Tallahassee, FL 32306-1042
United States

Danling Jiang

College of Business, Stony Brook University ( email )

306 Harriman Hall
Stony Brook, NY 11794
United States

HOME PAGE: http://sites.google.com/site/danlingjiang

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