Signaling in Equity Crowdfunding

Entrepreneurship Theory and Practice, Forthcoming

45 Pages Posted: 14 Feb 2015  

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: February 12, 2015

Abstract

This paper presents a first-ever empirical examination of the effectiveness of signals that entrepreneurs use to induce (small) investors to commit financial resources in an equity crowdfunding context. We examine the impact of venture quality (human capital, social (alliance) capital, and intellectual capital) and uncertainty on fundraising success. Our data highlight that retaining equity and providing more detailed information about risks can be interpreted as effective signals and can therefore strongly impact the probability of funding success. Social capital and intellectual capital, by contrast, have little or no impact on funding success. We discuss the implications of our results for theory, future research and practice.

Keywords: Equity Crowdfunding, Entrepreneurial Finance, Entrepreneurship, Signaling

JEL Classification: G24, G32, M13, K22, L26

Suggested Citation

Ahlers, Gerrit K.C. and Cumming, Douglas J. and Guenther, Christina and Schweizer, Denis, Signaling in Equity Crowdfunding (February 12, 2015). Entrepreneurship Theory and Practice, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2564121

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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