Can Blockchain based Supply Chain Create a Stock Market Reaction? Evidence from an Event Study

Abstract

This study investigates Blockchain based Supply chain (BC-SC) announcements impact on the stock market. Using a sample of 104 announcements between 2016 and 2021, we conduct an international event study to determine the market reaction. We find that an overall positive market reaction of 1.45% to all BC-SC announcements on the announcement day. In addition, we find that the stock market reaction slightly differs when different SC challenges are targeted by the announcing firm. When blockchain is used for traceability purposes, the market response is less positive when compared to other SC challenges like resolving disputes, maintaining cargo integrity and data security. We further find that firms that are part of BC industrial collaborations experience a more positive stock market response, when compared to firms using private or public BC networks. When looking into firm characteristics, we find that innovative firms experience greater positive reaction to BC-SC announcements. Interestingly, we find that smaller firms do not experience a strong positive market response. Leveraging the diverse industries in our sample, we investigated the effect of early adoption of BC-SC with respect to the industry. The late BC-SC adoption in the manufacturing sector only received a significantly positive market reaction. Overall, it seems that the market views many BC initiatives as adding to the competitiveness and long-term profitability of organizations. It also shows that BC, as a multi-stakeholder technology should be evaluated from both a strategic and operational perspective. Other implications and research directions are also identified; especially given the limitations of the study and the relatively early BC-SC supply chain developments.