Riding the Blockchain Mania: Public Firms’ Speculative 8-K Disclosures

Stephanie F. Cheng (), Gus De Franco (), Haibo Jiang () and Pengkai Lin ()
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Stephanie F. Cheng: A.B. Freeman School of Business, Tulane University, New Orleans, Louisiana 70118
Gus De Franco: A.B. Freeman School of Business, Tulane University, New Orleans, Louisiana 70118
Haibo Jiang: A.B. Freeman School of Business, Tulane University, New Orleans, Louisiana 70118; School of Management, Université du Québec à Montréal, Montreal, Quebec H2X 3X2, Canada
Pengkai Lin: A.B. Freeman School of Business, Tulane University, New Orleans, Louisiana 70118

Management Science, 2019, vol. 65, issue 12, 5901-5913

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 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

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