How Markets Value The Blockchain Technology: An Empirical Analysis

Abstract: In this work company announcements of blockchain name changes are empirically analysed to obtain a sense of how markets value the blockchain technology. This “blockchain effect” is analysed using an event study in order to calculate cumulative abnormal returns for multiple event windows. The “blockchain effect” generates cumulative average abnormal return of 58 percent for the five days surrounding the announcement day. The effect stays stable over a +90 day post-event period and thus persists, at the least, over the short- to medium-term. No significant variations across different firm specific characteristics, such as industry or stock exchange listing, are observed. The results are robust to outliers and momentum effects, however, the results show dependency on investors’ market sentiment, that is; in market upturns, significantly greater abnormal returns are generated than in market downturns. The results show strong similarities in terms of market valuation to comparable technological innovations in the past.