Journal of Applied Finance & Banking

Investigating the Impact of Financial Reporting for Cryptocurrencies on Company Value

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• Abstract

   

  This research focuses on investigating the impact of cryptocurrency accounting reports on company value (measured by financial performance) before and during the COVID 19 epidemic. Analyzing publicly listed companies’ data in firms’ 10-K filings, we find that there is no significant relation with the company’s profits while a company holds cryptocurrency positions. Although the issue of cryptocurrency accounting is an emerging topic, prior literature is mostly focused on cryptocurrency investment and is a rare investigation coping with the accounting treatment of crypto-assets. This paper seeks to contribute to the knowledge of fresh issues surrounding the accounting practices and standards tied to cryptocurrency for the company’s holding of crypto-assets. Taken together, the observed findings obtained from the test of the second hypothesis show that there is no significant relationship with the company’s stock returns while a company holds cryptocurrency positions. This result can be interpreted to determine whether the general investors take a more positive or negative attitude towards companies involved in cryptocurrency holding. Crucially, research findings unveil that cryptocurrency holdings have a significant impact on a company's liabilities. Our empirical evidence could be beneficial to public authorities and firms in decision- making situations related to cryptocurrency holdings of companies.

   

  JEL classification numbers: G10, G18, M14, M41.

  Keywords: Cryptocurrency accounting reports, Crypto-asset holdings, Firm value.