Riding the Wave of Crypto-Exuberance: The Potential Misusage of Corporate Blockchain Announcements

59 Pages Posted: 2 Feb 2021

See all articles by Erdinc Akyildirim

Erdinc Akyildirim

ETH Zürich - Department of Mathematics

Shaen Corbet

Dublin City University ; University of Waikato - Management School

Douglas J. Cumming

Florida Atlantic University

Brian M. Lucey

Trinity Business School, Trinity College Dublin; Ho Chi Minh City University of Economics and Finance; Jiangxi University of Finance and Economics

Ahmet Sensoy

Borsa Istanbul

Date Written: January 1, 2021

Abstract

Cryptocurrencies have been broadly scrutinised in recent times for a host of concerning regulatory and cybercriminality issues. Although steps have been taken to promote regulatory sufficiency in the near future, we examine the avenues through which this extremely high-risk industry can derive potentially devastating contagion channels, influencing both unwilling and unsuspecting investors. We focus this research on the expressions of interest by publicly traded companies across the world to utilise cryptocurrency and blockchain projects. We find evidence that there exists a substantial stock price premium and sustained increase in volatility in the aftermath of blockchain announcements, with emphasis on highly-speculative motives such as coin creation and corporate name changes. Changes in price discovery and information flows are found to be largely determined from cryptocurrency-based pricing sources in the aftermath of speculative announcements. We discuss the inherent ethical and legal issues, considering as to whether such announcements are simply an attempt to artificially manipulate share prices and take part in the current phase of crypto-exuberance.

Suggested Citation

Akyildirim, Erdinc and Corbet, Shaen and Cumming, Douglas J. and Lucey, Brian M. and Sensoy, Ahmet, Riding the Wave of Crypto-Exuberance: The Potential Misusage of Corporate Blockchain Announcements (January 1, 2021). Available at SSRN: https://ssrn.com/abstract=3758490 or http://dx.doi.org/10.2139/ssrn.3758490

Erdinc Akyildirim

ETH Zürich - Department of Mathematics ( email )

ETH Zentrum HG-F 42.1
Raemistr. 101
CH-8092 Zurich, 8092
Switzerland

Shaen Corbet (Contact Author)

Dublin City University ( email )

Dublin 9
Ireland

University of Waikato - Management School ( email )

Hamilton
New Zealand

Douglas J. Cumming

Florida Atlantic University ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

HOME PAGE: http://sites.google.com/view/douglascumming/bio?authuser=0

Brian M. Lucey

Trinity Business School, Trinity College Dublin ( email )

The Sutherland Centre, Level 6, Arts Building
Dublin 2
Ireland
+353 1 608 1552 (Phone)
+353 1 679 9503 (Fax)

Ho Chi Minh City University of Economics and Finance ( email )

59C Nguyen Dình Chieu
6th Ward, District 3
Ho Chi Minh City, Ho Chi Minh 70000
Vietnam

Jiangxi University of Finance and Economics ( email )

South Lushan Road
Nanchang, Jiangxi 330013
China

Ahmet Sensoy

Borsa Istanbul ( email )

Reşitpaşa mh.
Tuncay Artun cd.
Istanbul, 34467
Turkey

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