Rotman Study Finds Firms Simplified Cryptocurrency Disclosures During Bull Markets Ahead of Reporting Standardization
Toronto, August 27, 2025 – In a revealing new study by researchers at the University of Toronto’s Rotman School of Management, companies were found to strategically simplify or ‘dumb down’ their cryptocurrency disclosures during times of strong market performance to appeal to investors, while reducing the prominence of such disclosures in bear markets prior to the establishment of unified reporting standards.
The research examined the financial disclosures of five major companies—GameStop, Tesla, MicroStrategy, Coinbase, and PayPal—spanning the volatile cryptocurrency market landscape from late 2018 through the turbulent “crypto winter” ending in late 2022.
According to Professor Ramy Elitzur, senior author and accounting expert at Rotman, “To effectively ‘sell’ investors on complex issues, such as cryptocurrency activities, firms may intentionally simplify or ‘dumb down’ the information. When market conditions are favourable, firms emphasize or actively promote their involvement in these activities. Conversely, during downturns, firms strategically distance themselves to avoid negative associations or heightened scrutiny.”
The study applied advanced artificial intelligence, machine learning, and textual analysis techniques to systematically evaluate how these companies disclosed their cryptocurrency activities. For companies like Tesla, which primarily used cryptocurrency as a financial asset or method of payment, the narratives differed significantly from firms focused on providing crypto trading services, such as Coinbase and PayPal.
Findings revealed that disclosures became more frequent, readable, and positive during crypto market upswings, aligning with increased investor interest and rationales for bullish outlooks. As markets cooled and the price of Bitcoin and other digital assets declined, firms pared back detailed or optimistic descriptions of their blockchain-related activities.
Professor Wendy Rotenberg, co-researcher, explained that these disclosure patterns provide insight into corporate behavioural strategies in the absence of comprehensive reporting guidelines. Her team found statistically significant positive correlations between Bitcoin prices and various disclosure metrics, with correlations ranging from 22% to 34%, indicating a strong linkage between market sentiment and corporate disclosure practices.
The research, published in the Journal of Alternative Finance in June 2025, signals a need for standardized cryptocurrency reporting frameworks. Such standards would enhance transparency, reduce investor confusion, and improve regulatory oversight as digital assets gain mainstream prominence.
As the cryptocurrency sector continues to evolve, this study underscores the strategic role of corporate disclosures in shaping investor perceptions and highlights the ongoing challenges companies face in conveying complex, fast-changing financial information.
About the Research:
– Title: Text Analysis of Corporate Cryptocurrency Disclosures in Varying Market Conditions
– Methods: AI-enabled textual analysis and data visualization
– Subjects: GameStop, Tesla, MicroStrategy, Coinbase, PayPal
– Findings: Disclosure frequency and complexity vary with crypto market performance
– Published in: Journal of Alternative Finance, June 2025
– Conflict of Interest: None declared by authors