The Effect of Blockchain Adoption on Accounting Transparency and Cost of Equity Capital: Early Evidence

Posted: 15 Feb 2022

See all articles by Jae Yeon Sim

Jae Yeon Sim

Korea University

Yong Keun Yoo

Korea University Business School

Date Written: December 10, 2021

Abstract

This paper initially attempts to analyze the effects of blockchain technology adoption on accounting transparency and cost of equity capital. Since bitcoin prices skyrocketed in 2016, applications for blockchain technology rapidly increased in various areas. Unlike traditional database system, blockchain technology can provide a decentralized database system which guarantees high-level information security that is highly likely to affect accounting information. Therefore, the analysis using the data of non-financial and non-regulated firms between 2013 and 2019 shows whether blockchain technology adoption is associated with accounting transparency and cost of equity capital. We find that firm’s blockchain adoption contributes to increasing the accounting transparency and decreasing the cost of equity capital. The results provide policy implications for regulatory bodies to consider adopting the blockchain technology. The regulatory bodies may support accounting education that combines blockchain technology in order to strengthen the ability to cope with and utilize the accounting field technology. On top of that, the empirical results raise a variety of future research questions. Follow-up studies can analyze the impact of blockchain technology on firm’s another aspect.

Keywords: Blockchain, Accounting Transparency, Earnings Management, Cost of Equity Capital

JEL Classification: M4, M40, M41

Suggested Citation

Sim, Jae Yeon and Yoo, Yong Keun, The Effect of Blockchain Adoption on Accounting Transparency and Cost of Equity Capital: Early Evidence (December 10, 2021). Available at SSRN: https://ssrn.com/abstract=3982181

Jae Yeon Sim (Contact Author)

Korea University ( email )

1 Anam-dong 5 ka
Seoul, 136-701
Korea, Republic of (South Korea)

Yong Keun Yoo

Korea University Business School ( email )

1 Anam-dong 5 ka
Seoul, 136-701
Korea, Republic of (South Korea)

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