Columbia Law Researchers Finds Firms Used “Blockchain” to Boost Stock Performance | Crowdfund Insider

Researchers writing for the Columbia Law School blog have found that many speculative and established companies that promised to develop blockchains between 2009 and mid-2018 “stimulated investor attention,” but that, “Few firms…developed successful blockchain projects.”

The researchers begin by recalling that:

“In January 2018, Securities and Exchange Commission Chairman Jay Clayton highlighted a growing trend of blockchain disclosures from public firms with no meaningful track record in blockchain technology.”

The researchers say they set out to test Clayton’s contention and determine whether “firms opportunistically disclose their blockchain activities” to induce a favourable investor response.

Project participants identified 736 8-Ks (“report(s) of unscheduled material events or corporate changes”) “containing the words ‘blockchain,’ ‘bitcoin,’ or ‘cryptocurrency(ies)’ issued by 224 unique SEC registrants.”

A sample of 82 company’s public disclosures was reviewed to determine whether or not, “the company…(has) a significant commitment to or a track record in blockchain technology.”

If no, the company was labeled ‘Speculative’:

“Speculative firms are more likely to mention blockchain in a vague way and issue blockchain 8-Ks in the context of board member changes, future plans, developments involving subsidiaries, or investments.”

Researchers plotted, “initial blockchain disclosures as well as the Bitcoin price on a quarterly basis,” and found:

“Blockchain disclosures and Bitcoin price move together (with a small lag) over time.”

Speculative firms accounted for a majority of 8-K blockchain announcements made at the top of the last Bitcoin hype cycle:

“We also find that this dramatic increase in blockchain disclosures in the latter period of our sample (i.e., after January 2017) is driven by Speculative firms, which account for 77 percent of the blockchain 8‑K disclosers. This pattern…

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