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 language | English |
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Article number | 101814 |
Journal | Journal of Corporate Finance |
Volume | 66 |
Early online date | 5 Dec 2020 |
DOIs | |
Publication status | Published - 28 Feb 2021 |
Bibliographical note
Publisher Copyright:© 2020 Elsevier B.V.
Copyright:
Copyright 2020 Elsevier B.V., All rights reserved.
Keywords
- Blockchain
- Idiosyncratic volatility
- Investor sentiment
- Leverage
- Social media
ASJC Scopus subject areas
- Business and International Management
- Finance
- Economics and Econometrics
- Strategy and Management