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

Author

Listed:
  • 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)

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.

Suggested Citation

  • Stephanie F. Cheng & Gus De Franco & Haibo Jiang & Pengkai Lin, 2019. "Riding the Blockchain Mania: Public Firms’ Speculative 8-K Disclosures," Management Science, INFORMS, vol. 65(12), pages 5901-5913, December.
    • Handle: RePEc:inm:ormnsc:v:65:y:2019:i:12:p:5901-5913
    DOI: 10.1287/mnsc.2019.3357
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    13. Julien Chevallier & Dominique Guégan & Stéphane Goutte, 2021. "Is It Possible to Forecast the Price of Bitcoin?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-04250269, HAL.
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