Firm-Level cryptocurrency adoption and trading silence before anticipated information events

Trading silence, defined as unusually low trading activity, before anticipated firm information events, is an important capital market phenomenon which hampers price discovery. Using unique data on firm-level cryptocurrency holdings extracted from the SEC filings, we find that trading silence before quarterly earnings announcements intensifies after a firm’s initial adoption of cryptocurrency. Moreover, we find that this effect is stronger for a subsample of firms reporting losses. Our findings are robust to the endogenous concern and to a difference-in-differences design with propensity score matching. Our study suggests that cryptocurrency held by corporations has a significant impact on equity investors’ willingness to engage in trading before anticipated firm announcements.