Want a stock price bump? Put 'blockchain' in your financial statements

Quick Take

• Amidst a continual drip of corporate blockchain newsflow, I keep coming back to the question of whether these touted initiatives will ever actually be accretive for shareholders, given the time and cost of initial investment
• I came across an academic paper which explored whether stock market investors actually value firms investing in blockchain technology (via share appreciation), or if they simply view these stocks as a convenient way to speculate on Bitcoin, blockchain, and other cryptocurrency hoopla
• The paper found that an initial reaction to the news of investment into blockchain generated almost a 15% BHAR (buy-and-hold abnormal stock return) vs. a benchmark through the event day (1 day prior to 1 day after)
• The study also found that when firms specifically mention the term “blockchain” in their financial statements, by the end of the initial investment announcement quarter and/or year, they saw an initial reaction 29% higher than other blockchain investing firms, with virtually no sign of reversal in the following three months