Signaling in Equity Crowdfunding

49 Pages Posted: 15 Oct 2012 Last revised: 5 Oct 2014

Gerrit K.C. Ahlers

A.T. Kearney GmbH

Douglas J. Cumming

York University - Schulich School of Business

Christina Guenther

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics

Denis Schweizer

Concordia University

Multiple version iconThere are 3 versions of this paper

Date Written: October 14, 2012

Abstract

This paper presents an initial empirical examination of which start-up signals will induce small investors to commit financial resources in an equity crowdfunding context. We examine the impact of firms’ financial roadmaps (e.g., preplanned exit strategies such as IPOs or acquisitions), external certification (awards, government grants and patents), internal governance (such as board structure), and risk factors (such as amount of equity offered and the presence of disclaimers) on fundraising success. Our data highlight the importance of financial roadmaps and risk factors, as well as internal governance, for successful equity crowdfunding. External certification, by contrast, has little or no impact on success. We also discuss the implications for successful policy design.

Keywords: Entrepreneurial Finance, (Equity) Crowdfunding, Micro Lending, Internet, Signaling

JEL Classification: G21, G24, L26

Suggested Citation

Ahlers, Gerrit K.C. and Cumming, Douglas J. and Guenther, Christina and Schweizer, Denis, Signaling in Equity Crowdfunding (October 14, 2012). Available at SSRN: https://ssrn.com/abstract=2161587 or http://dx.doi.org/10.2139/ssrn.2161587

Gerrit K.C. Ahlers

A.T. Kearney GmbH ( email )

Charlottenstraße 57
Berlin, 10117
Germany

Douglas J. Cumming

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

HOME PAGE: http://booksite.elsevier.com/9780124095373/

Christina Guenther

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics ( email )

Kahlaische Strasse 10
D-07745 Jena, 07745
Germany

Denis Schweizer (Contact Author)

Concordia University ( email )

1455 de Maisonneuve Blvd. W.
Montreal, Quebec H3G 1M8
Canada
+1 (514) 848-2424 ext. 2926 (Phone)
+1 (514) 848-4500 (Fax)

HOME PAGE: http://www.concordia.ca/jmsb/faculty/denis-schweizer.html

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