Publication Type

Journal Article

Version

acceptedVersion

Publication Date

12-2019

Abstract

This paper provides evidence on public firms' initial 8-K disclosures that mention Blockchain and investors' response to these disclosures. We categorize the description of Blockchain activities in firms' 8-Ks as Speculative (e.g., a vague future plan that involves Blockchain) or Existing (e.g., a description of Blockchain product). We document a sharp increase in the number of initial 8-K disclosures of Blockchain, particularly by Speculative firms, coinciding with the rise of Bitcoin prices and excitement in Blockchain technology in the last quarter of 2017. Investors react positively to the Blockchain 8-Ks issued by Speculative firms in the initial seven-day event window although the reaction is mostly reversed over the 30 days following the disclosure. The reaction is stronger when Bitcoin returns are more positive. Overall, our results are consistent with a situation that troubles the SEC and the financial press: investors overreact to a firm's first 8-K disclosure of a potential foray into Blockchain technology and that overreaction is a function of the Bitcoin price bubble.

Keywords

Blockchain, Bitcoin, SEC 8-K filing, disclosure, market mania

Discipline

Accounting

Research Areas

Corporate Reporting and Disclosure

Publication

Management Science

Volume

65

Issue

12

First Page

5901

Last Page

5913

ISSN

0025-1909

Identifier

10.1287/mnsc.2019.3357

Publisher

INFORMS (Institute for Operations Research and Management Sciences)

Embargo Period

7-13-2021

Additional URL

https://doi.org/10.1287/mnsc.2019.3357

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