When Blockchain Creates Shareholder Value: Empirical Evidence from International Firm Announcements

Abstract

Blockchain is a prominently discussed technology in operations and supply chain management and firms increasingly engage in blockchain initiatives. Yet, an understanding of the technology's financial value remains elusive. Based on 175 firm announcements between 2015 and 2019, we conduct an international event study to estimate the impact of blockchain initiatives on the market value of the firm. We empirically demonstrate that blockchain announcements are associated with a significant average abnormal return of 0.30% on the announcement day, and that there are indications of positive long‐term effects on shareholder value. We further demonstrate how blockchain use case, project, and firm characteristics affect the stock market reaction. Specifically, we find that the stock market reaction to blockchain announcements is less positive when blockchain is used to trace physical objects or to share sensitive data, providing empirical evidence for the risk associated with current challenges in the design of blockchain use cases. Our results also suggest that the involvement of an external information technology service provider in a blockchain project attenuates the positive stock market reaction. Interestingly, more innovative firms do not experience a stronger stock market reaction to blockchain announcements. Leveraging the international scope of our sample, we further shed light on how the firm's competitive (i.e., industry factors) and macro environment (i.e., country factors) affect the stock market reaction. Our findings indicate that the industry's R&D intensity and the country's data restriction level play a crucial role in driving the value attributed to blockchain initiatives.

Blockchain announcements and stock value: a technology management perspective

“…We find that the positive market reaction associated with blockchain announcements is mainly reflected on the announcement day. Therefore, day 0 is appropriate to study the ARs associated with blockchain announcements, and a similar window period is also used by Kl€ ockner et al (2022). As shown in Panel B and Panel C, the calculation results obtained by the market-adjusted model and the Carhart four-factor model are no different than those obtained by the market model.…”

“…Cheng et al, 2019). Although Kl€ ockner et al (2022) has explored the market reaction to pure blockchain announcements in developed markets from an IT business value perspective, little in-depth research is conducted on the impact of the pure and simple blockchain announcements in emerging markets. To the best of our knowledge, this is the first event study to focus on blockchain announcements in an emerging market and explore the underlying factors influencing the value of blockchain activities in China.…”

“…This is a numerical variable. We use the ratio of the number of patents to firm assets in the fiscal year preceding the announcement to capture enterprise innovation ability (Kl€ ockner et al, 2022). According to H6, the coefficient of X 5 is expected to be positive.…”

“…Wadhawan, 2019) on the market's response to blockchain announcements. Kl€ ockner et al (2022) consider the value of substantiated blockchain initiatives from the IT business value perspective and explore how the design of blockchain use cases, project settings and firm characteristics affect the stock market response to blockchain announcements. However, as far as we know, few blockchain announcement studies have been conducted from resource-based theory (RBT) to construct a complete framework of the impact mechanism of blockchain announcements on the stock price of the announcing firm.…”

“…However, as far as we know, few blockchain announcement studies have been conducted from resource-based theory (RBT) to construct a complete framework of the impact mechanism of blockchain announcements on the stock price of the announcing firm. Third, current blockchain announcement research often targets the developed stock markets (Cheng et al, 2019;Kl€ ockner et al, 2022), lacking in-depth analysis on the impact of the pure and simple blockchain announcements in emerging markets. However, the difference in business environments is an important reason for inconsistent empirical results (Zhu et al, 2022).…”