Signaling in equity crowdfunding
Abstract
This chapter uses data on equity crowdfunding from the Australian Small Scale Offerings Board, one of the world’s first equity crowdfunding platforms in the world, for studying the role of signaling in equity crowdfunding. It considers the effectiveness of signals that entrepreneurs use to induce (small) investors to commit financial resources to equity crowdfunding campaigns. It examines the impact of venture quality [human capital, social (alliance) capital, and intellectual capital] and uncertainty on fundraising success. The data highlights that retaining equity and providing more detailed information about risks can be interpreted as effective signals and can therefore strongly impact the ...
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