Beyond Financing: Crowdfunding as an Informational Mechanism
26 Pages Posted: 27 Nov 2016
Date Written: 2016
Besides providing financial support for new ventures, crowdfunding can bring additional advantages for entrepreneurs. In this paper, we test the hypothesis that crowdfunding also serves as an informational mechanism. Using a unique dataset built with publicly available data from Internet-based sources, and after controlling for alternative explanations, we empirically show that even when not successful on crowdfunding, thus not accessing capital, project owners may still decide to release the product in the market if contributions suggest positive valuation of the “crowd”.
Keywords: crowdfunding, information, uncertainty, e-commerce, new product release
JEL Classification: D83, G21, L15, L26
Suggested Citation: Suggested Citation