Blockchain Adoption and Financial Distress: Mediating Role of Information Asymmetry

Yasmine Souissi (), Ferdaws Ezzi () and Anis Jarboui ()
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Yasmine Souissi: University of Sfax
Ferdaws Ezzi: University of Sfax
Anis Jarboui: University of Sfax

Journal of the Knowledge Economy, 2024, vol. 15, issue 1, No 156, 3903-3926

Abstract: Abstract Blockchain is an emerging decentralized ledger technology and distributed computing paradigm which has recently attracted strong attention. However, the lack of empirical evidence on the benefits of this technology has confounded information technology managers about investing in it. This study addresses this issue by investigating the relationship between blockchain technology and firms’ financial distress with particular emphasis on the mediating role of information asymmetry. This research is based on a sample of 297 European companies listed in the STOXX Europe 600 during 2014–2018. Our feasible generalized least squares (FGLS) results show that blockchain technology’s adoption significantly reduces the financial distress of the firm. In addition, the link between blockchain technology and firms’ financial distress is mediated by information asymmetry. Blockchain technology can facilitate information transformation and improve banks’ information acquisition ability. Besides, the employment of smart contracts and collaborative mechanism can reduce information risk and achieve lower financial distress. The research contributes to the literature by confirming the role of blockchain technology in reducing financial distress. The study opines that the firm’s access to finance can be improved through the adoption of this technology and achieve greater transparency and lower costs.

Keywords: Blockchain technology; Financial distress; Information asymmetry; STOXX Europe 600 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s13132-023-01263-3

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