Chapter 2

Overview of agency and signaling theory in crowdfunding

Abstract

The chapter describes information asymmetries and agency problems in crowdfunding. It is the only chapter that does not consider data. The intention in this chapter is to provide a framework for working through the data and concepts in the subsequent chapters.

Keywords

Agency theory; crowdfunding; entrepreneurship; entrepreneurial finance; information asymmetry; moral hazard; adverse selection

2.1 Introduction

This chapter provides an overview of the agency theory and signaling theory in the context of crowdfunding.

The term “agency cost” generally refers to things that parties to a contract might do, which are in their own self-interest but against the interest of the other ...

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