Stock price relevance of voluntary disclosures about blockchain technology and cryptocurrencies

This study examines the value relevance of blockchain and cryptocurrency disclosures in firms’ 10-K filings, which act as proxies for the firms’ involvement in this trending technology and its applications. Using textual analysis to quantify blockchain and cryptocurrency disclosures, the study first shows that these disclosures overall are value relevant. However, when the disclosures are further categorized into cryptocurrency and blockchain disclosures, the result only holds for blockchain disclosures, not for cryptocurrency disclosures. To further identify the topics and themes of these disclosures, we adopt latent Dirichlet allocation (LDA) topic modeling. Among the five topics that are identified from the blockchain and cryptocurrency disclosures through LDA (blockchain technology solutions, risk factors, general business descriptions, payment services, and bitcoin transactions), we find that only the disclosures about blockchain technology solutions and risk factors have positive value relevance, while the disclosures about bitcoin transactions are negative. The results indicate that investors positively value the involvement of blockchain technology applications in business operations or solutions and not cryptocurrency-related issues.