In other words, the companies that changed name were not doing well (in terms of share price) in the lead up to their name change. They then saw a massive increase in their share price, up to 30 days after changing name, presumably as investors looking to jump on the cryptocurrency bandwagon bought into the companies. Then the share price started falling back to its original level.The paper I referred to, by Jain and Jain, was published in the journal Economics Letters. The latest issue of the same journal has another article in a similar vein (sorry I don't see an ungated version online, but it appears that it is open access for now), this one authored by Prateek Sharma (IIM Udaipur), Samit Paul (IIM Calcutta), and Swati Sharma (Jawaharlal Nehru University). They build on the earlier Jain and Jain paper, but extend the analysis in several ways, most importantly by: (1) extending the sample from 10 company name changes to 39; and (2) considering a comparison group of crypto-currency-related companies that did not change names, and another comparison group of non-crypto-currency-related companies that did change names. The comparison groups were matched to the sample in terms of share price, market capitalisation and value.
Looking at share returns, they find that:
...the share price of the sample firms increases significantly following the name change announcement... The most dramatic price increase occurs in the first couple of days, as the average share price increases from $2.24 on day −1 to $3.26 on day +1. We find no evidence of a post-announcement negative drift in share prices. The average share price is $4.07 on day +10, $4.36 on day +30 and $4.65 on day +50.Comparing with the comparison groups, they find that:
These abnormal returns cannot be explained by industry factors, as the sample firms generate significantly higher abnormal returns than those generated by the sample of matched cryptocurrency firms that did not change their names... the sample firms experience larger and more permanent changes in value compared to similar noncryptocurrency firms that changed their corporate names during the sample period.A rose by any other name may smell as sweet, but a company that includes blockchain in its name is clearly sweeter (apologies to The Bard).
Another article in the same issue of that journal also caught my attention, because it also relates to bitcoin. Debojyoti Das (Woxsen School of Business in India) and Anupam Dutta (University of Vaasa in Finland) look at the correlation between bitcoin miners' total revenue (not individual-level data, but revenue in total for all bitcoin miners) and energy usage, using data from February 2017 to March 2019. This is a low-quality paper, not least because they use quantile regression when it is totally unnecessary, so I won't dwell on it too much. Moreover, the results are surprising and under-explained, which also makes me wonder why this study was published in this form.
Das and Dutta find a negative correlation between miners' revenue and energy usage. In other words, total revenue (for all miners collectively) is high when their energy usage is low, and total revenue is low when energy usage is high. I would have thought that, when miners were engaged in more activity, revenue would be high and so would energy usage. That would suggest the correlation should be positive, not negative. However, that assumes that we are holding the price of bitcoin constant. These results basically suggest that the price of bitcoin is negatively correlated with energy usage, and it is hard to see why that would be. This is definitely a study that requires revisiting, and with more appropriate quantitative methods.
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