The differential impact of corporate blockchain-development as conditioned by sentiment and financial desperation

Research output: Contribution to journalArticlepeer-review

Abstract

This paper investigates how companies can utilise Twitter social media-derived sentiment as a method of generating short-term corporate value from statements based on initiated blockchain-development. Results indicate that investors were subjected to a very sophisticated form of asymmetric information designed to propel sentiment and market euphoria, that translates into increased access to leverage on the part of speculative firms. Technological-development firms are found to financially behave in a profoundly different fashion to reactionary-driven firms which have no background in ICT technological development, and who experience an estimated increased one-year probability of default of 170 bps. Rating agencies are found to have under-estimated the risk on-boarded by these speculative firms, failing to identify that they should be placed under an increased degree of scrutiny. Unfiltered market sentiment information, regulatory unpreparedness and mis-pricing by trusted market observers has resulted in a situation where investors and lenders have been compromised by direct exposure to an asset class becoming known for law-breaking activity, financial losses and frequent reputational damage.

Original languageEnglish
Article number101814
JournalJournal of Corporate Finance
Volume66
Early online date5 Dec 2020
DOIs
Publication statusE-pub ahead of print - 5 Dec 2020

Keywords

  • Blockchain
  • Idiosyncratic volatility
  • Investor sentiment
  • Leverage
  • Social media

ASJC Scopus subject areas

  • Business and International Management
  • Finance
  • Economics and Econometrics
  • Strategy and Management

Cite this