Borsa Istanbul Review 24 (2024) 424–434

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Borsa Istanbul Review

journal homepage: www.elsevier.com/journals/borsa-istanbul-review/2214-8450

Blockchain mania: A perspective on corporate executive opportunism

Qilin Wang a, Yanhao Ding b, *, Jinzhao Liu c, d, Yehua Huang e
a
Business School, Hunan University, Changsha, China
b
School of Economics and Management, North China Electric Power University, Beijing, China
c
School of Business, Beijing Technology and Business University, Beijing, China
d
Academy of Mathematics and Systems Science, Chinese Academy of Sciences, China
e
School of Business, Renmin University of China, Beijing, China

A R T I C L E I N F O A B S T R A C T

JEL classification: This study investigates whether investors’ overreactions to blockchain-related announcements is driven by
G12 corporate executive opportunism in the Chinese capital market. We manually collect blockchain-related an­
G14 nouncements made by Chinese listed firms over 2016–2022 and conduct an event study to estimate market
Keywords: reaction. The announcements are further categorized as value-driven and speculation-driven announcements.
Blockchain Although both announcement types elicit positive short-term market reactions, the long-term reactions to
Speculation
speculation-driven announcements fade and even reverse, while the value-driven ones remain positive. Addi­
Corporate Executive Opportunism
tionally, we determine that speculation-driven announcements are followed by seasoned equity offerings,
negative news releases, and reductions in the stockholdings of large shareholders and executives, suggesting
corporate executive opportunism. Finally, we demonstrate the efficacy of internal and external corporate
governance in reducing corporate executive opportunism. Our study sheds light on market reactions to
blockchain-related announcements from the perspective of executives’ opportunism.

1. Introduction countries, information disclosures in the emerging market in developing

The spread of blockchain technology has attracted investors’ atten­
tion across the global capital market (Cahill et al., 2020; Chen et al.,
2024; Li et al., 2022). There is growing literature on the phenomenon
known as "blockchain mania", in which investors are keen to purchase
stocks that claim to incorporate blockchain technology (Cahill et al.,
2020; Cheng et al., 2019; Jain & Jain, 2019). The widespread enthu­
siasm for blockchain stocks can be attributed to two factors. One
perspective suggests that implementing blockchain enhances a firm’s
value by augmenting its competitive advantage (Chen et al., 2019; Li
et al., 2022), and that positive market reactions persist. Whereas, an
opposing view posits that the fervor surrounding blockchain is driven by
the irrational expectation of investors (Akyildirim et al., 2020; Autore
et al., 2021; Cahill et al., 2020; Cheng et al., 2019; Jain & Jain, 2019),
with eventual reversals in stock prices. However, both opinions
emphasize investors’ perceptions of blockchain-related information
disclosed by corporate executives, neglecting the motivation and reli­
ability of voluntary information disclosure about blockchain in­
vestments. Compared to the sophisticated capital market in developed
countries are not adequately regulated, with a lot of unreliable or false
information in firms’ announcements, and this exacerbates further in
instances of voluntary disclosure (Li et al., 2018; Wang et al., 2021; Zeng
et al., 2012). In reality, many firms disseminate misleading information
by leveraging investors’ enthusiasm. For example, some firms intend to
ride the blockchain mania by adding "blockchain" to their names, even
though they do not have any blockchain investments. Other firms
release speculative blockchain-related announcements conveying
misleading information to attract investors’ attention and further facil­
itate their opportunistic behaviors. Hence, this paper attempts to explain
investors’ reactions to blockchain-related announcements from a unique
perspective: corporate executive opportunism. We investigate whether
the speculative attributes of disclosed blockchain-related announce­
ments trigger different market reactions in an emerging capital market.
We provide empirical evidence on investors’ overreactions to
blockchain-related announcements and further prove that it arises due
to speculative information disclosure by corporate executives. Further­
more, we verify that the inflated stock prices resulting from the specu­
lative blockchain-related announcements facilitate corporate

Peer review under responsibility of Borsa İstanbul Anonim Şirketi.

* Corresponding author. School of Economics and Management, North China Electric Power University, No. 2 Beinong Road, Changping District, Beijing, China.
E-mail addresses: qilinwang@hnu.edu.cn (Q. Wang), rbsdingyanhao@163.com (Y. Ding), liujz@btbu.edu.cn (J. Liu), huangyh0126@qq.com (Y. Huang).

https://doi.org/10.1016/j.bir.2024.02.003
Received 19 July 2023; Received in revised form 13 February 2024; Accepted 13 February 2024
Available online 17 February 2024
2214-8450/Copyright © 2024 Borsa İstanbul Anonim Şirketi. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).
Q. Wang et al.
opportunistic behaviors, including seasoned equity offerings, negative
information distraction, and shareholding reduction. Finally, we explore
factors from internal and external governance to mitigate speculative
information disclosure and decrease investors’ overreactions to
blockchain-related announcements.
The origins of corporate executive opportunism can be attributed to
market timing theory (Altı, 2005; Baker & Wurgler, 2002; Bolton et al.,
2013). Firms are prone to initiate equity financing when stock prices are
overvalued and start stock repurchases when they are underpriced (Altı,
2005; Baker & Wurgler, 2002). The primary factor underlying corporate
executive opportunism is the exploitation of information asymmetry
between insiders and external investors (Bolton et al., 2013).
Blockchain-related announcements are voluntary information disclo­
sure options that are not strictly regulated or monitored by the China
Securities Regulatory Commission. Hence, corporate executives take
advantage of information asymmetry and selectively announce volun­
tary information disclosure to manipulate stock prices for personal profit
(Blacconiere et al., 2011; Brockman et al., 2010; Lee et al., 2023; Wang
et al., 2021). Driven by blockchain mania, it is difficult for investors to
recognize the real potential of blockchain-related announcements in the
short run, so firms can achieve inflated stock prices from speculative
disclosures and further take advantage of positive market reactions to
facilitate their opportunistic behaviors.
We first investigate how investors react to blockchain-related an­
nouncements in the Chinese capital market. Following Cooper et al.
(2001), we employ an event study to calculate the Cumulative Abnormal
Returns (CARs) after blockchain-related announcements. We observe
significantly positive short-term market responses within 15 days after
announcements, but the market reactions do not persist, suggesting in­
vestors’ overreactions to blockchain-related announcements. Moreover,
we want to identify whether investors react differently to the motivation
and reliability of blockchain-related announcements and verify whether
speculative blockchain information disclosure triggers investors’ over­
reactions to blockchain-related announcements. Following Cheng et al.
(2019) and Cahill et al. (2020), we divide all blockchain-related an­
nouncements into two types based on textual analysis. If an announce­
ment distinctly delineates the correlation between blockchain
technology and the firm’s operational activities, supported by details on
the name of the investment project, investment value, and collaborative
partners, such announcements are categorized as value-driven an­
nouncements, whereas speculation-driven announcements merely
mention blockchain technology without providing specific details or
only elucidate the application of blockchain technology without direct
relevance to the firm’s operational nexus. We observe positive market
reactions to both types of announcements in the short term, whereas the
reactions diverge in the long term; that is, they fade and even reverse.
This reversal further verifies our viewpoint: some firms employ
misleading textual elucidations to grasp investor attention, causing a
short-term surge in stock prices. However, in the long term, the pur­
ported blockchain investments fail to enhance the firm’s value and a
reversal in stock price ensues.
To verify the speculative motive of the vague and unconvincing
description in blockchain-related announcements, we test whether firms
with speculative blockchain information disclosure initiate more
opportunistic behaviors. We find that firms are more likely to issue
seasoned equity offerings, release negative news, and initiate share­
holding reductions by insiders following speculative blockchain infor­
mation disclosures. This suggests that executives exploit speculative
announcements to attract investors’ attention and inflate stock prices,
facilitating their opportunistic behaviors.
Finally, we want to know whether internal and external governance
can mitigate executives’ speculative motives in blockchain-related an­
nouncements and weaken investors’ overreactions. Since investors are
attracted by a firm’s speculative blockchain announcements in the short
term, leading to statistically similar positive market reactions as value-
driven blockchain announcements, distinguishing whether investors
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Borsa Istanbul Review 24 (2024) 424–434
exhibit overreaction in the short term is challenging. Therefore, we
employ long-term stock reversals as a metric to assess investor over­
reaction. We find that both internal and external governance are
conducive to curbing executives’ opportunistic behaviors, thereby
mitigating investor overreaction.
This study makes three contributions to the existing literature. First,
it provides evidence of the market reaction to disruptive new technology
in emerging capital markets. Previous studies on blockchain market
reactions have mainly focused on developed countries (Akyildirim et al.,
2020; Autore et al., 2021; Cahill et al., 2020; Cheng et al., 2019; Jain &
Jain, 2019). However, those studies assume that information disclosures
truthfully reflect firms’ investment activities. Yet, China’s information
disclosure environment is relatively deficient, creating a gap between
blockchain information disclosure and blockchain investments. Second,
we explore the "Blockchain Mania" phenomenon from the perspective of
corporate executive opportunism. Although previous studies have
documented the phenomenon and demonstrated that positive stock
market reactions are a result of both the rise in the fundamental value of
blockchain-related firms and the irrational behavior of investors, our
research sheds light on a new perspective on corporate executive
opportunism, revealing that executives strategically make ambiguous
announcements related to blockchain technology to temporarily artifi­
cially inflate stock prices and facilitate their opportunistic behaviors.
Third, this study contributes to the literature on the effectiveness of
corporate internal and external monitoring; providing further evidence
that internal and external governance helps mitigate opportunistic be­
haviors when firms face disruptive technology mania.
This paper is structured as follows: Section 2 introduces an overview
of blockchain development in the Chinese capital market and proposes
hypotheses, Section 3 describes the data and model settings, Section 4
presents the empirical results, and Section 5 concludes.
2. Research background and hypothesis development
2.1. Blockchain development and information disclosure in China
Blockchain was first proposed by Nakamoto in 2008 as the under­
lying technology for Bitcoin. Subsequently, Buterin introduced Ether­
eum in 2013, aiming to realize Szabo’s smart contract and support
decentralized applications. As blockchain technology has developed and
matured, it has been applied in various fields such as financial services,
supply chain management, cultural and entertainment industries, and
intelligent manufacturing1. This has attracted significant attention from
the capital market. Don Tapscott, the father of digital economics,
pointed out that a new opportunity that could impact human civilization
and progress was emerging, and that opportunity was the underlying
technology of digital currency, blockchain. Since 2016, many Chinese
authorities have issued policies to promote blockchain development in
China. In October 2019, the Collective Study in the 18th Central Political
Bureau identified blockchain as an important breakthrough for tech­
nological innovation, elevating it to a significant national strategy. As of
December 2021, 27 provinces have included blockchain in their gov­
ernment working reports.
Despite China’s increasing maturity and diverse application of
blockchain technology, there is still an absence in its information
disclosure system. Blockchain announcements are voluntary informa­
tion disclosures that give corporate executives the freedom to determine
both timing and content. The regulatory authority encounters substan­
tial difficulties verifying the authenticity and accuracy of such an­
nouncements. In the Chinese capital market, blockchain-related firms
have repeatedly experienced limit-ups in stock prices, and the number of
1
Refer to the "China Blockchain Technology and Application Development
White Paper (2016)" released by the China Blockchain Technology and Industry
Development Forum in October 2016.
Q. Wang et al.
blockchain-related announcements made by listed firms increased in
early 20182. This phenomenon has attracted significant attention from
regulatory authorities. On January 16, 2018, the Shenzhen and
Shanghai Stock Exchanges successively issued statements that they
would strengthen the regulation on blockchain-related announcements.
To respond to regulatory inquiries, firms such as Youzu Interactive and
Kela Software released clarification announcements, stating that their
exploration of blockchain technology was still in its infancy and had not
yet generated actual revenue. Hengyin Financial and Yijian Shares even
halted trading multiple times. On February 1, 2018, the Small and
Medium-sized Investor Service Center of the China Securities Regulatory
Commission reminded investors to beware of blockchain speculation in
listed firms. However, on February 10, the stock price of blockchain-
related firms still soared. According to the Securities Daily, as of
December 21, 2018, out of 80 so-called blockchain concept stocks, 23
were subject to regulatory inquiries, with nearly 48 having no tangible
investment in blockchain. In 2019, Xinhua News Agency pointed out
that "more than 500 of the over 3000 A-share listed firms claim to be
related to blockchain, but only less than 40 have disclosed specific
blockchain-related business that is true and effective".
Until May 2021, the China Securities Regulatory Commission offi­
cially implemented the amended "Management Measures for Informa­
tion Disclosure of Listed Companies". This revision explicitly prohibits
the manipulation of security prices through voluntary information
disclosure. Hence, determining whether corporate executives engage in
riding blockchain mania through blockchain information disclosure
manipulation and how to mitigate this is critical to capital market in­
vestors and regulatory authorities.
2.2. Hypothesis development
Blockchain technology is believed to have substantial potential to
promote the core competencies of firms because of its decentralized,
tamper-proof, and transparent characteristics (Chen et al., 2019; Li
et al., 2022). Moreover, prior studies also verified investors’ acknowl­
edgement of the market value associated with blockchain, evidenced by
positive market reactions in the short term (Akyildirim et al., 2020;
Autore et al., 2021; Cahill et al., 2020; Cheng et al., 2019; Jain & Jain,
2019). However, since blockchain technology encompasses compre­
hensive, cutting-edge technologies from various disciplines, its inte­
gration by firms necessitates a robust foundation for technological
development (Demirkan et al., 2020), which lends itself to information
asymmetry. Hence, executives find it expedient to disseminate ambig­
uous descriptions in their blockchain-related announcements to attract
investors’ attention. Stock prices inflate following these announcements.
In the long run, the real value of the announcements will be digested in
stock prices; firms with ambiguous blockchain information disclosure
exhibit a speculative inclination, and some even release speculative
blockchain announcements as a means to diverse investors’ attention
and conceal bad news (Cheng et al., 2019). Such speculative behaviors
manifest in long-term stock prices, resulting in eventual stock price re­
versals. Based on the above, we propose the following hypothesis.
H1. Investors demonstrate positive reactions to blockchain-related an­
nouncements in the short term; however, reversals occur in the long term for
speculation-driven announcements.
Based on signaling theory, if a firm possesses substantive blockchain
involvements, it has an incentive to provide detailed disclosures to
enhance the credibility of blockchain-related announcements. This helps
reduce information asymmetry, consequently lowering their capital
costs. Hence, only speculative firms are motivated to employ ambiguous
descriptions. Market timing theory indicates that insiders have an
2
Refer to Table 1 for the sample distribution of blockchain-related an­
nouncements by year.
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Borsa Istanbul Review 24 (2024) 424–434
information advantage over outsiders; therefore, major shareholders
could use their information advantage to time the stock issue and
repurchase for profit (Altı, 2005; Baker & Wurgler, 2002). As voluntary
information disclosures, executives could exploit the information
asymmetry from blockchain-related announcements and capitalize on
investors’ overreactions to elevate short-term stock prices, thereby
facilitating opportunistic behavior (Blacconiere et al., 2011; Brockman
et al., 2010). In particular, if a firm needs to undergo seasoned equity
financing, the short-term increase in stock prices can help to reduce
equity financing costs. Consequently, the firm is incentivized to capi­
talize on speculative information disclosure to elevate stock prices
before the seasoned equity offerings (SEO) (Deshmukh et al., 2017;
McLean & Zhao, 2014). Similarly, the literature has found that firms’
strategic timing in voluntary announcements often occurs when there is
a need to divert investors’ attention and conceal unfavorable news. For
instance, when a firm is about to release a quarterly report that falls
short of expectations, it is motivated to preemptively release positive
news (Wasley & Wu, 2006; Brown et al., 2012). Additionally, if insiders,
such as major shareholders and executives, intend to reduce share­
holdings to realize capital gains, they are also motivated to boost stock
prices in advance through speculative blockchain information disclo­
sure, enhancing their profitability (Aboody & Kasznik, 2000; Chan et al.,
2020). As such, we propose the following hypothesis.
H2. Firms’ speculative blockchain announcements facilitate opportunistic
behaviors, including seasoned equity financing, bad news releases, and
shareholding reductions by insiders.
3. Data and methodology
3.1. Sample and data
We obtained blockchain-related announcement data for Chinese-
listed firms from CNINFO3, which is operated by the China Securities
Regulatory Commission and provides financial and securities-related
information to the public. First, we manually collected all announce­
ments made by Chinese-listed firms from 2016 to August 31, 2022,
which includes China’s early emergence stage of blockchain technology,
the rapid development stage, and the government-led regulation stage.
The sample provides a comprehensive overview of China’s blockchain
development. We then screened for blockchain-related announcements.
The preliminary screening criteria identified announcements with key­
words related to blockchain in the title or text. These keywords included
“blockchain,” “Bitcoin,” “Ethereum,” “Litecoin,” “virtual currency,” “cryp­
tocurrency,” “hash pointer,” “smart contract,” “distributed ledger,”
“consensus algorithm,” “distributed system,” “encryption algorithm,” “public
chain,” “consortium chain,” “ICO,” “token,” among others. This step
yielded 2,649 blockchain-related announcements. Furthermore, we
removed samples with time intervals between two blockchain-related
announcements from the same firm that were less than 60 working
days, samples from the financial industry, and ST firms. This left 1,757
blockchain-related announcements. Finally, we manually read the
announcement texts and marked the speculation-driven announce­
ments, characterized by: those that did not explicitly state that they
involved blockchain at the time, those that were uncertain about future
blockchain investment, those that only described the development
prospects of blockchain technology or its application scenarios in their
respective industries, and those that did not mention their own firm’s
application of blockchain technology.
In the OLS regression, we merged the blockchain announcements
sample with individual stock returns, market returns, Fama–French
Three and Five factors, and firm-year financial indicators for the trading
date. To examine both short- and long-term market reactions, we kept
3
See website in http://www.cninfo.com.cn/new/index.
Q. Wang et al.
stock reaction data for 120 days after announcements, resulting in a final
sample of 184,893 observations. Corporate Financial indicators were
obtained from the CSMAR and CNRDS databases. Continuous variables
were winsorized at the 1% and 99% levels to remove any outliers (see
variable construction and definitions in Appendix A).
3.2. Empirical setting
3.2.1. Cumulative abnormal return on blockchain-related announcements
We employ the event study methodology to assess the market reac­
tion by measuring the CAR after blockchain-related announcements. To
ensure accuracy, we follow specific calculation steps: (i) we select an
event window by determining the first trading day following a listed
firm’s blockchain-related announcement as the event day (i.e., t = 0);
(ii) we set the event window to [0, 1], [0, 3], [0, 5], [0, 7], [0, 15], [0,
30], [0, 60], and [0, 120] based on our research needs; (iii) we choose an
estimation window consisting of 180 trading days ranging from 225 to
46 trading days prior to the event day; (iv) we select the Fama–French
Five-factor model to estimate expected stock returns in the event win­
dow; (v) based on the estimation models, we calculate the Abnormal
Return (AR) and CAR. The estimation models are as follows (taking the
Fama–French Five-factor model as an example):
( )
Ri,t = α + βi ∗ FF5i,t (1)
( )
ARi,t = Ri,t − α + β̂i ∗ FF5i,t
̂ (2)
∑t2
CARi,t1,t2 = ARi,t (3)
t1
Where FF5i,t denotes the Fama–French Five factors, including market
risk premium (RiskPremium), size (SMB), value (HML), profitability
(RMW), and investment pattern (CMA). Model (1) estimates the co­
efficients α and βi using the estimation window of [-225, − 46], and the
expected stock returns during the event window are calculated based on
the estimated coefficients. Model (2) calculates the abnormal stock re­
turn by subtracting the expected return from the actual stock return.
Finally, Model (3) computes the CARs of the stock during the event
window.
3.2.2. Market overreaction to speculation-driven announcements
When interpreting market reactions to blockchain-related an­
nouncements, most studies assume that corporate announcements are
reliable and credible, with investors reacting positively due to their
rational value judgment or irrational sentiment. However, information
disclosure manipulation is quite common. When we were collecting data
on blockchain-related announcements, we noticed that certain firms
only described the development prospects of blockchain technology or
its application scenarios in their respective industries, and they did not
mention their own firm’s application of blockchain. Judging from the
positive market reactions in the short term, it is challenging to distin­
guish between investors’ rationality and overreaction. Hence, catego­
rizing all announcements into value-driven and speculation-driven
announcements. If investors’ reactions to speculation-driven an­
nouncements are positive in the short run and reverse in the long run,
then we may conclude that speculative information disclosures can
trigger investors’ overreactions.
Following Cheng et al. (2019), we add Speculation as a new factor to
explain CARs on blockchain-related announcements in both the short
and long run. The model is constructed as:
CARi,t = α + β1 Speculationi,t + Controls + Ind + εt (4)
Where CARi,t denotes the CAR of announcement i on date t days post the
event date, and t equals 1, 3, 5, 7, 15, 30, 60, and 120, respectively.
Speculationi,t is a dummy variable that takes the value of 1 if the an­
nouncements made by the firm are speculation-driven. Financial ratios
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Borsa Istanbul Review 24 (2024) 424–434
that include Size, Lev, Roe, Growth, and Mbratio are controlled. Industrial
fixed effects are also included. We run the above model in both the short
and long term. We expect β1 to be insignificant in the short run if in­
vestors are crazy about blockchains regardless of the announcement
texts. In contrast, in the long run, when the real value of the speculation-
driven announcements is digested in the stock prices, we observe re­
versals in the stock prices of speculation-driven announcements, hence
β1 is expected to be negative in the long term.
3.2.3. Speculation-driven announcements and executive opportunistic
behaviors
Based on signaling theory, ambiguous announcements are often
associated with speculative behaviors. Therefore, we want to know
whether firms conduct opportunistic behaviors following their specu­
lative blockchain information disclosure. We construct model (5) to
verify the argument.
Opportunismi,t = α + β1 Speculationi,t + Controls + Ind + Time + εt (5)
Where Opportunismi,t refers to the firms’ opportunistic behaviors,
including seasoned equity offerings, negative news releases, and re­
ductions in the stockholdings of large shareholders and executives. Here,
we run a pooled regression and further control the time duration fixed
effect of the tth day after the announcements (Time). We expect β1 to be
positive, suggesting that speculative blockchain information disclosures
trigger more opportunistic behaviors.
3.2.4. Corporate governance and investor overreactions
Furthermore, we examine whether corporate internal and external
governance could restrict opportunistic behaviors and further result in
weaker stock price reversals. Hence, we focus on long-term stock price
reversals and reg long-term CARs on the interaction term of Speculation
and corporate governance variables. The model is:
Reversali,t = α + β1 Speculationi,t + β2 Governi,t + β3 Speculationi,t ∗ Governi,t
+ Controls + Ind + Time + εt
(6)
Where Reversali,t is the CAR ranging from the 16th day to the tth post
blockchain-related announcements, defined as long-term stock price
reversals. We expect that the coefficient of β1 is negative, suggesting that
speculative disclosure will trigger a stock price reversal. If Govern rep­
resents enhanced internal or external corporate governance, we expect
the coefficient of β3 to be positive, implying that internal and external
governance can mitigate firms’ speculative disclosure and further result
in weaker long-term stock price reversals.
4. Empirical results and discussion
4.1. Descriptive statistics
The distribution of blockchain-related announcements by year is
displayed in Panel A of Table 1. There were only 28 blockchain-related
announcements in 2016, whereas in 2018, there was rapid growth, with
the number of announcements being over four times that of 2017. At this
point, blockchain technology had matured considerably, and its poten­
tial for development had been recognized by various firms. On October
24, 2019, the Political Bureau of the Central Committee of the
Communist Party of China conducted its 18th collective study on the
current situation and trends of blockchain technology, recognizing its
importance as a national strategy. Since then, the number of blockchain-
related announcements has steadily increased. Panel B of Table 1 shows
the distribution of blockchain-related announcements by industry. This
descriptive statistic indicates that blockchain technology has been
applied in almost all industries, with a focus on the software, informa­
tion technology, and manufacturing industries. Table 2 reports summary
Q. Wang et al. Borsa Istanbul Review 24 (2024) 424–434

Table 1 to calculate the CAR. Within the event window of [0, 1], the CAR value is
Sample distribution. significantly positive, and then CARs start to increase with time. How­
Panel A: Sample distribution by year ever, after 15 days, CARs start to decrease, even exhibiting insignificant
market reactions after 60 days. Panel B employs the Fama–French three-
Year Observations Percentage
2016 28 1.59% factor model, which exhibits nearly the same pattern as Panel A. This
2017 57 3.24% indicates that although the overall short-term market reactions are
2018 242 13.74% positive, the reactions fade in the long term, implying that investors’
2019 267 15.16% market responses to firms’ blockchain-related announcements maybe
2020 353 20.05%
2021 406 23.06%
partially driven by overreaction.
2022 408 23.17%
Total 1761 100.00% 4.2.2. Speculation and market reactions to blockchain-related
Panel B: Sample distribution by industry announcements
From the baseline results, we noticed that there might be market
Industry Observations Percentage
Accommodation and catering 2 0.11%
overreactions on blockchain-related announcements, but we cannot
Agriculture, forestry, husbandry and fishery 8 0.45% distinguish investors’ rationality and overreaction from short-term
Construction 32 1.82% positive market reactions. Hence, as we categorize all blockchain-
Culture, sports and entertainment 46 2.61% related announcements into speculation-driven announcements and
Education 7 0.40%
value-driven announcements, we want to see whether investors react
Electric power, heat, gas and water production and 25 1.42%
supply differently to the two announcement types in the short and long term.
Health and social work 6 0.34% Panel A in Table 4 displays market reactions to value-driven blockchain
Leasing and commercial service 71 4.03% announcements; the market reactions are positive in the short term and
Manufacturing 655 37.19% persist in the long term. Panel B in Table 4 displays market reactions to
Mining 13 0.74%
Water conservancy, environment and public facility 11 0.62%
speculation-driven announcements; investors react positively in the
management short term, but the positive reactions fade over the long term, even
Real estate 31 1.76% exhibiting negative CARs 60 days after the announcements.
Resident services and repair 1 0.06% To compare the market reactions, we run the CARs on dummy var­
Scientific research and technical service 23 1.31%
iable Speculation to illustrate whether the announcements are specula­
Information transmission, software and information 661 37.54%
technology services tive, and the results are presented in Table 5. The coefficient of
Transport, storage and postal service 85 4.83% Speculation indicates investors’ reactions to speculation-driven an­
Wholesale and retail 81 4.60% nouncements compared to value-driven announcements. It shows that
Diversified industries 3 0.17% investors do not distinguish speculation-driven announcements from
Total 1761 100.00%
value-driven ones, reacting statistically the same to the two, implying
Panel A of Table 1 displays the distribution of blockchain-related announce­ that investors are blind to the blockchain mania and fail to recognize
ments by year, and the sample period is from Jan 1st, 2016 to Aug 31st, 2022. value-driven blockchain announcements. In the long term, we observe
Panel B of Table 1 shows the distribution of blockchain-related announcements that the CARs of speculation-driven announcements are significantly
by industry, and the industry classification is based on the "Guideline on Industry
lower than those of value-driven announcements, starting from 30 days
Classification of Listed Companies" formulated by the SEC.
after the announcement dates. Essentially, investors overreact on
speculation-driven announcements in the short term, but we cannot tell
Table 2 this pattern from the CARs in the short term; instead, we can infer the
Key variables descriptive statistics. investors’ overreactions from the distinct reactions in the long run,
because only reactions on speculation-driven announcements eventually
Var. Obs. Mean S.D. Min. Median Max.
reverse.
StkRet 184,893 0.062 2.951 − 20.037 0.000 20.112
RiskPremium 184,893 0.041 1.390 − 8.756 0.059 6.066
4.3. Robustness checks
SMB 184,893 0.035 0.735 − 5.002 0.044 3.033
HML 184,893 − 0.009 0.634 − 2.512 − 0.031 2.673
RMW 184,893 0.015 0.595 − 2.959 0.017 4.527 4.3.1. Different asset pricing models
CMA 184,893 0.003 0.615 − 5.370 0.011 4.959 In Table 6, we conduct a robustness check of the baseline results in
Size 184,893 22.503 1.410 19.978 22.266 28.607
Table 5 using the Fama–French three-factor model. All the independent
Lev 184,893 0.428 0.197 0.061 0.421 0.950
Roa 184,893 0.010 0.104 − 0.553 0.030 0.185 variables remain the same. The coefficients of Speculation are similar to
Growth 184,893 0.099 0.332 − 0.675 0.068 2.028 those in Table 5.
Mbratio 184,893 2.034 1.250 0.817 1.663 7.879

Table 2 reports summary statistics for key variables in our empirical tests. For
each blockchain-related announcement, we retained stock return data from the
event date to 120 days after the announcement to study both the short-term and
long-term reactions of investors. We matched the financial data based on the
year of the announcement. All variable definitions are presented in Appendix A.
statistics for the main variables in our empirical tests, which are
consistent with related studies (Chen et al., 2022).
4.2. Baseline results
4.3.2. Sample adjustment
The baseline results in Table 5 are built on the assumption that
voluntary information disclosures are not sufficiently regulated in the
Chinese capital market. Due to the China Securities Regulatory Com­
mission officially implemented the amended "Management Measures for
Information Disclosure of Listed Companies". This revision explicitly
prohibits the manipulation of stock prices through voluntary informa­
tion disclosures. Hence, we exclude the blockchain-related announce­
ments released after May 2021 to make the institutional environment
consistent across our research sample. Table 7 shows the results of the
adjusted sample, and they are consistent with Table 5.

4.2.1. Market reaction to blockchain-related announcements

Table 3 presents market reactions to blockchain-related announce­
ments using an event study. Panel A uses the Fama–French Five factors

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Table 3
Cumulative Abnormal Return on blockchain-related announcements (with the full sample).
Event (1) (2) (3) (4) (5) (6) (7) (8)
Window [0,1] [0,3] [0,5] [0,7] [0,15] [0,30] [0,60] [0,120]

Panel A: Fama-French Five factors model

CAR 0.996*** 1.110*** 1.219*** 1.246*** 1.071*** 0.937*** 0.265 0.294
(8.46) (7.47) (7.18) (6.47) (4.12) (2.83) (0.54) (0.39)
Panel B: Fama-French Three factors model
CAR 0.963*** 1.056*** 1.103*** 1.101*** 0.868*** 0.706** 0.171 0.768
(8.20) (7.14) (6.53) (5.74) (3.34) (2.13) (0.35) (1.02)
Events 1761 1761 1761 1761 1761 1761 1761 1760

Table 3 displays the average market reaction to blockchain-related announcements within the full sample using the event study method. Panel A and Panel B are based
on the Fama-French Five Factors Model and Fama-French Three Factors Model, respectively. T-statistics are in parentheses, indicating the statistical significance of
CARs. *, **, and *** indicate significance at the 10%, 5%, and 1% level, respectively.

Table 4
Cumulative Abnormal Return on blockchain-related announcements (with value- and speculation-driven motives).
Event Window (1) (2) (3) (4) (5) (6) (7) (8)
[0,1] [0,3] [0,5] [0,7] [0,15] [0,30] [0,60] [0,120]

Panel A: CAR on value-driven blockchain announcements

CAR 0.996*** 1.140*** 1.288*** 1.315*** 1.273*** 1.380*** 1.157** 1.873**
(7.04) (6.27) (6.13) (5.52) (4.02) (3.47) (1.97) (2.10)
Events 1293 1293 1293 1293 1293 1293 1293 1292
Panel B: CAR on speculation-driven blockchain announcements
CAR 0.995*** 1.026*** 1.030*** 1.055*** 0.512 − 0.287 − 2.200*** − 4.062***
(4.77) (4.18) (3.85) (3.47) (1.17) (− 0.49) (− 2.62) (− 2.89)
Events 468 468 468 468 468 468 468 468

Table 4 displays the market reactions to two types of blockchain-related announcements. Panel A and Panel B show the CARs on value- and speculation-driven an­
nouncements, respectively, while the CARs are both estimated by the Fama-French Five Factors Model. T-statistics are in parentheses, indicating the statistical sig­
nificance of CARs. *, **, and *** indicate significance at the 10%, 5%, and 1% level, respectively.

Table 5
Market overreaction on speculation-driven announcements (with Fama-French five factors model).
Indep. Var. = CAR (1) (2) (3) (4) (5) (6) (7) (8)

[0,1] [0,3] [0,5] [0,7] [0,15] [0,30] [0,60] [0,120]

Speculation 0.078 0.034 − 0.147 − 0.167 − 0.568 − 1.600** − 2.990*** − 5.758***

(0.29) (0.10) (− 0.38) (− 0.38) (− 0.95) (− 2.12) (− 2.70) (− 3.30)
Size 0.004 0.218 0.137 0.093 0.157 − 0.024 − 0.008 − 0.560
(0.03) (1.53) (0.84) (0.51) (0.63) (− 0.08) (− 0.02) (− 0.77)
Lev − 0.465 − 1.219 − 1.660 − 1.464 − 1.354 1.250 1.781 3.587
(− 0.62) (− 1.30) (− 1.54) (− 1.20) (− 0.82) (0.60) (0.58) (0.75)
Roa 0.942 − 0.942 − 1.229 0.040 − 3.566 − 10.114*** − 10.680** − 10.111
(0.71) (− 0.56) (− 0.64) (0.02) (− 1.22) (− 2.75) (− 1.98) (− 1.18)
Growth 0.552 1.481*** 1.756*** 1.929*** 3.066*** 4.599*** 5.989*** 6.272**
(1.42) (3.03) (3.13) (3.04) (3.59) (4.27) (3.79) (2.52)
Mbratio 0.294*** 0.354** 0.199 0.297* 0.809*** 1.191*** 2.608*** 2.120***
(2.69) (2.57) (1.26) (1.66) (3.37) (3.92) (5.85) (3.01)
Constants 0.430 − 4.125 − 1.679 − 0.973 − 3.627 − 1.397 − 5.301 8.109
(0.17) (− 1.29) (− 0.46) (− 0.23) (− 0.65) (− 0.20) (− 0.51) (0.50)
Time FE YES YES YES YES YES YES YES YES
Ind FE YES YES YES YES YES YES YES YES
N 1757 1757 1757 1757 1757 1757 1757 1756
Adj. R2 0.032 0.034 0.031 0.032 0.038 0.053 0.056 0.034

Table 5 presents the difference between market reactions to speculation-driven and of value-driven blockchain-related announcements. The indicator variable
Speculation equals to 1 if the firm issues speculation-driven blockchain-related announcements to the public, while it takes the value of 0 when the market reaction is
related to value-driven ones. The dependent variables of Column (1) to Column (8) are the cumulative abnormal returns (CAR) for event window ranging from [0 1] to
[0120], respectively, where they are all estimated by the Fama-French Five Factors Model. Industry and time fixed effects are controlled across all columns. All re­
gressions have standard errors clustered at the firm level, which are reported in parentheses. *, **, and *** indicate significance at the 10%, 5%, and 1% level,
respectively. All related variables are defined in Appendix A.

4.4. Speculation-driven announcements and executive opportunistic
behaviors
Based on the empirical evidence presented earlier, investors exhibit
overreactions in response to firms’ speculation-driven blockchain an­
nouncements, leading to short-term positive reactions that are reversed
in the long term. Hence, we provide further evidence on firms’ oppor­
tunistic behaviors that take advantage of investors’ overreactions to
blockchain announcements. According to the literature, executives are
likely to issue SEOs, taking advantage of the inflated stock prices
resulting from blockchain-related announcements. In this case, firms can
achieve lower equity financing costs (Deshmukh et al., 2017; McLean &
Zhao, 2014). Moreover, firms are incentivized to manipulate stock pri­
ces before they release bad news in their financial reports to distract
investors’ attention and maintain stock prices (Wasley & Wu, 2006;
Brown et al., 2012). Furthermore, when insiders want to reduce their

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Table 6
Market overreaction on speculation-driven announcements (with Fama-French three factors model).
Indep. Var. = CAR (1) (2) (3) (4) (5) (6) (7) (8)

[0,1] [0,3] [0,5] [0,7] [0,15] [0,30] [0,60] [0,120]

Speculation 0.118 0.045 − 0.107 − 0.109 − 0.667 − 1.888** − 3.278*** − 5.941***

(0.43) (0.13) (− 0.27) (− 0.25) (− 1.12) (− 2.51) (− 2.98) (− 3.43)
Size 0.032 0.224 0.150 0.105 0.159 0.019 − 0.004 − 0.567
(0.28) (1.58) (0.93) (0.57) (0.64) (0.06) (− 0.01) (− 0.79)
Lev − 0.528 − 1.333 − 1.814* − 1.603 − 1.487 1.027 1.633 3.585
(− 0.71) (− 1.42) (− 1.69) (− 1.32) (− 0.91) (0.50) (0.54) (0.75)
Roa 0.876 − 0.663 − 0.685 0.596 − 2.793 − 9.272** − 10.025* − 9.818
(0.66) (− 0.40) (− 0.36) (0.28) (− 0.96) (− 2.53) (− 1.87) (− 1.15)
Growth 0.634 1.535*** 1.964*** 2.189*** 3.419*** 5.012*** 6.227*** 6.452***
(1.64) (3.15) (3.53) (3.47) (4.02) (4.67) (3.97) (2.61)
Mbratio 0.286*** 0.346** 0.181 0.268 0.881*** 1.357*** 2.824*** 2.287***
(2.62) (2.52) (1.15) (1.51) (3.68) (4.49) (6.39) (3.27)
Constants − 0.214 − 4.271 − 2.024 − 1.308 − 3.988 − 2.807 − 5.807 8.428
(− 0.08) (− 1.34) (− 0.55) (− 0.32) (− 0.71) (− 0.40) (− 0.56) (0.52)
Time FE YES YES YES YES YES YES YES YES
Ind FE YES YES YES YES YES YES YES YES
N 1757 1757 1757 1757 1757 1757 1757 1756
Adj. R2 0.029 0.032 0.031 0.034 0.042 0.059 0.063 0.036

Table 6 conducts robustness check of the baseline result in Table 5 by using the Fama-French Three Factor Model. All the independent variables are consistent with
those in Table 5. *, **, and *** indicate significance at the 10%, 5%, and 1% level, respectively. All related variables are defined in Appendix A.

Table 7
Market overreaction on speculation-driven announcements (before May 2021).
Indep. Var. = CAR (1) (2) (3) (4) (5) (6) (7) (8)

[0,1] [0,3] [0,5] [0,7] [0,15] [0,30] [0,60] [0,120]

Speculation 0.027 − 0.159 − 0.342 − 0.548 − 0.480 − 2.054** − 2.943** − 3.781*

(0.09) (− 0.40) (− 0.73) (− 1.06) (− 0.69) (− 2.18) (− 2.13) (− 1.75)
Size − 0.131 − 0.065 − 0.004 − 0.098 − 0.129 − 0.287 − 0.571 − 0.963
(− 0.96) (− 0.36) (− 0.02) (− 0.42) (− 0.41) (− 0.67) (− 0.91) (− 0.98)
Lev 0.367 0.410 − 0.606 − 0.010 0.886 1.386 3.471 6.490
(0.42) (0.36) (− 0.45) (− 0.01) (0.44) (0.51) (0.87) (1.04)
Roa 2.070 0.283 − 0.633 0.758 − 1.749 − 8.538* − 6.328 − 3.523
(1.48) (0.15) (− 0.29) (0.31) (− 0.54) (− 1.95) (− 0.98) (− 0.35)
Growth 0.381 1.556*** 1.755*** 2.215*** 4.544*** 5.987*** 7.691*** 10.340***
(0.88) (2.72) (2.59) (2.96) (4.51) (4.39) (3.85) (3.31)
Mbratio 0.229* 0.228 0.127 0.210 0.579** 1.189*** 2.376*** 1.831**
(1.82) (1.37) (0.65) (0.97) (1.99) (3.01) (4.11) (2.01)
Constants 3.134 1.734 1.014 2.638 2.023 3.947 5.867 12.763
(1.02) (0.43) (0.21) (0.50) (0.28) (0.41) (0.42) (0.58)
Time FE YES YES YES YES YES YES YES YES
Ind FE YES YES YES YES YES YES YES YES
N 1054 1054 1054 1054 1054 1054 1054 1053
Adj. R2 0.050 0.041 0.036 0.050 0.058 0.086 0.072 0.065

Table 7 excludes the blockchain-related announcements released after May 2021 to make the institutional environment consistent across our research sample. The
regression model and all the independent variables keep the same as Table 5. *, **, and *** indicate significance at the 10%, 5%, and 1% level, respectively. All related
variables are defined in Appendix A.

shareholdings, they are also motivated to manipulate stock prices up­
ward, taking advantage of investors’ blindness to blockchain-related
announcements (Aboody & Kasznik, 2000; Chan et al., 2020). Empiri­
cally, we regress the above opportunistic behaviors on Speculation to
verify whether firms benefit from their speculative blockchain infor­
mation disclosures.
In Column (1) of Table 8, the dependent variable is SEO, a dummy
variable denoting whether SEOs are issued within 30 days after block­
chain announcements. The coefficient of Speculation is positive, sug­
gesting that firms use speculative information disclosure to benefit their
equity financing. In Column (2), the dependent variable is Negative, a
dummy variable that takes the value of 1 if a firm issues a quarterly
financial report containing bad news on ROE within 30 days post the
blockchain-related announcements. Herein, bad news on ROE is defined
as a quarterly ROE lower than the ROE of the previous quarter. As the
result shows, the coefficient of Speculation is also positive, verifying that
when firms have bad news to release, they are incentivized to disclose
speculative blockchain-related announcements to decrease the negative
impact. In Columns (3)–(5), the dependent variables are the total shares
of shareholding reductions by insiders within 30 days after the
blockchain-related announcements, the number of shareholding re­
ductions by insiders within 30 days after the blockchain-related an­
nouncements, and the ratio of shareholding reductions by insiders
within 30 days after the blockchain-related announcements, respec­
tively. As expected, the coefficients of Speculation across the three col­
umns are significantly positive, suggesting that insiders are more likely
to reduce their shareholdings after the speculation-driven blockchain
announcements to leverage the temporarily inflated stock price result­
ing from investors’ short-term overreactions to blockchain-related
announcements.
4.5. Corporate governance and investor overreactions
The baseline results demonstrate that executives’ speculative be­
haviors can be a driving force behind investors’ overreactions to
blockchain-related announcements. Next, we discuss whether internal

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Table 8
Speculation-driven announcements and executives’ opportunistic behaviors.
Indep. Var. = Opportunism Refinancing Bad news release Shareholdings reduction by insiders

(1) SEO (2) (3) (4) (5)

Negative Chgnbr Chgratio Chgcount

Speculation 0.006*** − 0.003*** 0.264*** 0.782*** 0.029***

(7.02) (− 7.30) (6.97) (17.47) (5.72)
Size − 0.007*** − 0.000 − 0.822*** − 0.112*** − 0.123***
(-21.74) (-1.35) (-56.15) (-6.45) (-63.06)
Lev 0.042*** − 0.012*** − 1.124*** 2.079*** − 0.134***
(19.44) (− 11.33) (− 11.37) (17.77) (− 10.14)
Roe 0.042*** − 0.012*** − 1.124*** 2.079*** − 0.134***
(19.44) (− 11.33) (− 11.37) (17.77) (− 10.14)
Growth − 0.011*** − 0.005*** 0.886*** − 0.009 0.152***
(− 9.60) (− 8.63) (16.47) (− 0.13) (21.07)
Mbratio 0.002*** − 0.001*** 0.320*** 0.339*** 0.052***
(6.02) (− 8.45) (21.62) (19.40) (26.37)
Constants 0.158*** 0.021*** 24.366*** 1.051*** 3.419***
(22.06) (5.68) (74.17) (2.70) (77.79)
Time FE YES YES YES YES YES
Ind FE YES YES YES YES YES
N 184,893 184,893 184,893 184,893 184,893
Adj. R2 0.005 0.002 0.045 0.022 0.053

Table 8 displays the opportunistic behaviors of executives after the speculation- and the value-driven announcement of blockchain. The opportunistic behaviors
include seasoned equity offerings (SEO), bad new release (Negative), and the reduction in shareholdings by internal stakeholders (Chgnbr, Chgratio, Chgcount). All
regressions have standard errors clustered at the firm level, which are reported in parentheses. *, **, and *** indicate significance at the 10%, 5%, and 1% level,
respectively. All related variables are defined in Appendix A.

and external governance can mitigate executives’ speculative behaviors

Table 9
and further alleviate investors’ overreactions to blockchain-related
Internal governance and investors’ overreactions.
announcements.
Indep. Var. = Reversal (1) (2) (3) (4)
4.5.1. Internal governance Dual Mshratio CEOpower IndDirector
We measure internal governance from several perspectives: dual Speculation − 1.872*** − 1.789*** 3.032*** − 3.095***
roles of CEOs, executives’ ownership, CEOs’ power, and the monitoring (− 14.02) (− 14.95) (10.88) (− 10.46)
role of independent directors (Volpin, 2002; Baldenius et al., 2014; Govern 1.521*** − 0.039*** 4.492*** − 0.666***
Nguyen & Nielsen, 2010). First, Dual demonstrates whether a firm’s CEO (13.76) (− 8.62) (12.39) (− 17.73)
Speculation*Govern − 1.445*** − 0.105*** − 14.945*** 0.172**
also chairs the board of directors. We assume that dual roles will amplify
(-6.90) (− 12.19) (− 21.35) (2.38)
CEOs’ power and facilitate their opportunistic behaviors. Second, we use Size − 0.197*** − 0.342*** − 0.214*** − 0.138***
Mshratio to measure the ratio of shares held by executives. Intuitively, (− 4.57) (− 7.85) (− 4.97) (− 3.19)
executives endowed with more shares are more incentivized to manip­ Lev 2.800*** 2.263*** 2.575*** 2.846***
(9.83) (7.94) (9.06) (10.00)
ulate stock prices. Third, we use CEOpower to denote CEOs’ power
Roa − 9.394*** − 9.386*** − 9.661*** − 10.181***
within a firm. Powerful CEOs are allowed more discretion and decision (− 18.55) (− 18.58) (− 19.14) (− 20.14)
rights; making them more likely to take advantage of their power. Growth 2.766*** 2.798*** 2.692*** 2.716***
Fourth, IndDirector is employed to measure the ratio of independent (18.73) (18.95) (18.23) (18.39)
directors in the board of directors. Independent directors are more Mbratio 1.465*** 1.427*** 1.472*** 1.538***
(35.19) (34.22) (35.37) (36.81)
incentivized to play their monitoring role; hence, more independent
Constants − 0.415 4.055*** − 0.953 1.258
directors will effectively mitigate agency problems. (− 0.42) (4.09) (− 0.97) (1.29)
Table 9 presents the results. Here, the dependent variable is long- Time FE YES YES YES YES
term market reactions, measured by the CAR on blockchain-related Ind FE YES YES YES YES
N 184,893 184,893 184,893 184,893
announcements starting from the 16th day after the announcement
Adj. R2 0.033 0.034 0.034 0.034
date. As previously clarified, we cannot capture market overreaction in
the short term, therefore we focus on long-term reversals to capture Table 9 displays the effect of internal governance on investors’ overreactions
market overreaction on speculation-driven announcements. We reg the driven by the speculative blockchain-related announcements. The dependent
long-term CARs on Speculation and its interaction term with internal variable is the CARs from the 16th day to the tth post the blockchain-related
announcements, denoting the long-term stock price reversals. The key inde­
governance variables. We expect the coefficient of Speculation to be
pendent variable Govern is shown as the dual role of CEOs (Dual), the insiders’
negative, suggesting stock price reversals in speculation-driven an­
shareholdings (Mshratio), powerful CEOs (CEOpower), and the proportion of
nouncements. If the coefficient of the interaction term is positive, the independent directors (IndDirector). The key independent variable, which is
internal governance variable we adopt can mitigate the speculative interacted by Speculation and Govern, reports the differences between the effect
disclosure of executives and further mitigate investors’ overreactions. of speculation motives on market reaction to the blockchain-related
Otherwise, the internal governance variable aggravates executives’ announcement under different governance environments. Time and Industry
opportunistic behaviors and investors’ overreactions. fixed effects are controlled across all columns. All regressions have standard
Column (1) covers the impact of CEOs’ dual roles and shows that the errors clustered at the firm level, which are reported in parentheses. *, **, and
coefficients of both Speculation and the interaction term are significantly *** indicate significance at the 10%, 5%, and 1% level, respectively. All related
negative, as expected, indicating that the dual roles of CEOs amplify variables are defined in Appendix A.
their opportunistic behaviors and investors’ overreactions. Similarly,
Column (2) examines the impact of executives’ ownership and the co­
efficient of the interaction term is significantly negative, verifying that

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Q. Wang et al. Borsa Istanbul Review 24 (2024) 424–434

executives’ ownership would sharpen their speculative disclosure about Table 10

blockchain investment and further result in heightened investor over­ External governance and investors’ overreactions.
reaction. Column (3) investigates the influence of CEOs’ power, showing Indep. Var. = Reversal (1) (2) (3) (4)
that more powerful CEOs would engage with more speculative infor­
Audit AnaNum Media Insshratio
mation disclosure and further generate more investor overreaction.
Column (4) shows the impact of independent directors; firms with a Speculation − 2.392*** − 3.160*** − 4.409*** − 3.846***
(− 20.25) (− 21.72) (− 19.11) (− 21.64)
higher ratio of independent directors are less likely to engage in Govern − 3.928*** − 1.502*** − 0.024** − 0.035***
opportunistic behaviors and induce less investor overreaction on (− 29.81) (− 29.07) (− 2.45) (− 13.10)
blockchain-related announcements. Speculation*Govern 0.526** 0.620*** 0.190*** 0.040***
Based on Table 9, we can conclude that from the perspective of in­ (2.18) (7.67) (9.24) (9.42)
Size − 0.155*** 0.641*** − 0.258*** − 0.016
ternal governance, to mitigate speculative information disclosure and
(− 3.62) (12.18) (− 5.98) (− 0.35)
investors’ overreactions, firms are expected to restrict the CEO’s role, Lev 2.647*** 1.487*** 2.580*** 2.662***
ownership, and power, and introduce more independent directors. (9.33) (5.19) (9.07) (9.36)
Roa − 9.321*** − 7.264*** − 9.673*** − 9.331***
4.5.2. External governance (− 18.49) (− 14.14) (− 18.99) (− 18.36)
Growth 2.893*** 3.248*** 2.756*** 2.751***
We measure external governance from several aspects: auditors’ (19.63) (21.86) (18.64) (18.62)
reputation, analysts’ coverage, media coverage, and institutional in­ Mbratio 1.473*** 1.937*** 1.463*** 1.563***
vestors’ ownership (Blum et al., 2022; Dai et al., 2015; Zeng et al., (35.42) (43.41) (35.12) (36.69)
2023). First, we use Audit to demonstrate whether the auditing office Constants 0.099 − 17.114*** 1.912** − 2.728***
(0.10) (− 14.74) (1.96) (− 2.61)
that provides the external auditing service for the firms’ financial re­
Time FE YES YES YES YES
ports ranks in the top 10 in the Chinese auditing industry. We assume Ind FE YES YES YES YES
that high-ranking auditing offices are more reputable and responsible N 184,893 184,893 184,893 184,893
for the reliability of firms’ information disclosure; hence, they can play a Adj. R2 0.038 0.036 0.032 0.033
monitoring role to mitigate executives’ speculative information disclo­ Table 10 displays the effect of external governance on investors’ overreactions
sure. Second, we use AnaNum to denote the intensity of analyst driven by the speculative blockchain-related announcements. The dependent
coverage. Generally, analysts collect and analyze information about a variable is the CARs from the 16th day to the tth post the blockchain-related
firm from both private and public channels and further mitigate the announcements, denoting the long-term stock price reversals. The key inde­
information asymmetry between investors and firms. For pendent variable Govern in Column (1) to Column (4) represents the power of
blockchain-related announcements, analysts are more professional in auditors (AudBig10), analysts (AnaNum), media (Media), and institutional
identifying the reliability of the information; therefore, they serve as shareholders (Insshratio), respectively. The interaction term (Spec­
supervisors on firms’ speculative information disclosure. Third, we use ulation*Govern) reports the differences between investors’ overreactions driven
by the speculative blockchain-related announcements under different gover­
Media to measure the number of media reports on a firm. Similarly,
nance environments. Time and Industry fixed effects are controlled across all
media reports disclose supplementary information that further alleviate
columns. All regressions have standard errors clustered at the firm level, which
the information asymmetry between investors and firms. Hence, more are reported in parentheses. *, **, and *** indicate significance at the 10%, 5%,
media coverage is expected to mitigate executives’ speculative behav­ and 1% level, respectively. All related variables are defined in Appendix A.
iors and lower investor overreaction. Fourth, Insshratio is employed to
measure the ratio of institutional investors’ ownership. Institutional external governance, firms with more reputable auditors, more analyst
investors are also effective external supervisors that alleviate agency coverage, more media report, and more institutional investors are less
problems and prevent executives’ opportunistic behaviors. We assume likely to engage in speculative information disclosure and would be
that firms with more institutional investors’ ownership are more likely associated with weaker investor overreaction to blockchain-related
to generate lower market overreactions. announcements.
Table 10 presents the results. Similarly, the dependent variable here
is also long-term market reactions, measured by the CAR on blockchain- 5. Conclusion
related announcements starting from the 16th day after the announce­
ment dates. We reg the long-term CARs on Speculation and its interaction Blockchain technology represents a significant opportunity for
term with external governance variables. We expect the coefficient of developing economies, as it can alleviate some of their challenges, such
the interaction term to be positive, suggesting that the external gover­ as corruption, inefficiency, and a lack of confidence in conventional
nance variables adopted can mitigate the speculative disclosure of ex­ institutions. However, the current hype cycle and market speculation
ecutives and further mitigate investor overreaction. surrounding blockchain can lead to a distortion in resource allocation,
Column (1) investigates the impact of auditors’ reputation, showing with more funding flowing toward speculative entities. This would
that the coefficient of Speculation is positive and that of the interaction impede the long-term development of blockchain technology. Thus,
term is significantly negative, indicating that reputable auditors could analyzing market reactions to blockchain-related announcements from
mitigate firms’ opportunistic behaviors and investors’ overreactions. the perspective of executive speculative information disclosures is of
Similarly, Column (2) examines the impact of analyst coverage; the
great importance.
coefficient of the interaction term is significantly positive, verifying that We find that investors overreact in response to blockchain-related
analyst coverage would mitigate firms’ speculative disclosure about
announcements in the Chinese capital market, and corporate execu­
blockchain investment and further result in weaker investor over­ tives’ opportunism serves as the catalyst driving investors’ over­
reaction. Column (3) investigates the influence of media coverage and
reactions. First, we demonstrate that while short-term stock market
shows that more media reports decrease the information asymmetry reactions to blockchain-related announcements are positive, they
between investors and firms, prevent firms’ speculative information
eventually fade. Specifically, the long-term market reactions to
disclosure, and generate less investor overreaction. Column (4) exam­ speculation-driven announcements fade and even reverse. As additional
ines the impact of institutional investors; firms with higher ownership of evidence, we determine that the speculation-driven announcements are
institutional investors are less likely to engage in opportunistic behav­ followed by seasoned equity offerings, negative news releases, and re­
iors and induce less investor overreaction on blockchain-related ductions in the stockholdings of large shareholders and executives,
announcements. suggesting opportunistic behaviors associated with speculative
Based on Table 10, we can conclude that from the perspective of

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blockchain information disclosure. Finally, we conclusively demonstrate Funding

the efficacy of both internal and external corporate governance in
reducing corporate executive opportunism and investor overreaction.
Our study contributes to the study of market reactions to blockchain-
related announcements from the perspective of executives’ oppor­
tunism and sheds light on measures to mitigate corporate speculative
behaviors and weaken investors’ overreactions.
We acknowledge the financial support from National Natural Science
Foundation of China (Grant No. 72002006), R&D Program of Beijing
Municipal Education Commission (Grant No. SM202110011009).
Declaration of competing interest

No potential conflict of interest was reported by the authors.

Appendix A. Variable Definitions

Panel A: Dependent Variables

CAR_FF3 Cumulative abnormal return using Fama-French Three Factors Model.

CAR_FF5 Cumulative abnormal return using Fama-French Five Factors Model.
Reversal Cumulative abnormal return ranging from the 16th day to the tth after the blockchain-related announcements, defined as the long-term stock price reversals.
SEO A dummy variable, indicating whether a firm initiate seasoned equity offerings within 30 days post the blockchain-related announcements.
Negative A dummy variable, indicating whether a firm releases a negative quarterly financial report within 30 days post the blockchain-related announcements, and negative
quarterly financial reports refer to quarterly financial reports with a ROE lower than the ROE of the previous quarter.
Chgnbr The natural logarithm of the total shares of shareholdings reductions by insiders within 30 days post the blockchain-related announcements.
Chgcount The natural logarithm of the number of shareholding reductions by insiders within 30 days post the blockchain-related announcements.
Chgratio The ratio of shareholding reductions to total shareholdings held by large shareholders or executives within 30 days post the blockchain-related announcements.

Panel B: Independent Variables

Speculation A dummy variable which takes the value of 1 if the blockchain-related announcements are driven by speculation, characterized by those that did not explicitly state that
they involved blockchain at the time, those that were uncertain about future blockchain investment, those that only described the development prospects of blockchain
technology or the application scenarios of blockchain technology in their respective industries, and those that did not mention their own firm’s application of blockchain
technology

Panel C: Control Variables

Size The natural logarithm of firm’s total assets.

Lev The ratio of firm’s total liabilities to total assets.
Roa Return on total assets, measured by the firm’s net income divided by lagged total assets.
Growth Growth rate of operating revenue.
Mbratio The firm’s market value of equity divided by book value of total common equity.

Panel D: Moderating Variables

Dual An indicator variable that equals to 1 if the CEO of the firms also chairs the board of directors.
Mshratio The ratio of shares held by executives.
CEOpower CEO power, measured by the ratio of CEO’s salary to the average salary of top 3 executives.
IndDirector The ratio of independent directors in the board of directors.
Audit A dummy variable that equals to 1 if a firm hires one of the top 10 accounting agencies in China for external auditing services.
AnaNum The natural logarithm of the number of analysts following the firm.
Media The natural logarithm of the number of media reports on the firm.
Insshratio The ratio of shares held by institutional investors for the firm.

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