Deciphering blockchain’s impact on earnings quality and firm value

This study investigates the impact of blockchain technology adoption on earnings quality and firm value. Using a global sample of 115 large public companies implementing blockchain, we employ a difference-in-differences methodology with a propensity score-matched control group to examine changes in earnings management practices and corporate valuation around blockchain implementation. Contrary to expectations that blockchain’s transparency would curtail earnings manipulation, we find that adopting firms exhibit increased income smoothing post-implementation. However, this smoothing appears to be informative rather than opportunistic, enabling managers to signal future earnings trajectories and mitigate short-term volatility arising from substantial implementation costs. Consistent with the informative perspective, we further show that blockchain-driven income smoothing is positively associated with future firm value, particularly among firms with higher pre-adoption information asymmetry. Our findings provide novel evidence on the interaction between emerging technologies and financial reporting, highlighting blockchain’s potential to reduce information asymmetry and enhance earnings informativeness.