Dynamics of Investor Communication in Equity Crowdfunding

35 Pages Posted: 4 May 2017

See all articles by Gregor Dorfleitner

Gregor Dorfleitner

University of Regensburg - Department of Finance

Lars Hornuf

University of Bremen - Faculty of Business Studies and Economics; Max Planck Institute for Innovation and Competition; CESifo (Center for Economic Studies and Ifo Institute)

Martina Weber

University of Regensburg - Department of Finance

Date Written: May 4, 2017

Abstract

In crowdfunding, start-ups can voluntarily communicate with their investors by posting updates. We investigate whether start-ups strategically use updates, which were previously shown to increase investments. To this end, we use hand-collected data of 751 updates and 39,036 investment decisions from the two major German equity crowdfunding portals Seedmatch and Companisto. We find evidence for strategic communication behavior of startups during an equity crowdfunding campaign. During the funding period, start-ups post updates with linguistic devices that enhance the group identity and the group cohesion. Furthermore, the probability of an update during the funding period increases with a strong competition of other contemporary crowdfunding campaigns.

Keywords: Crowdfunding, Investor Communication, Entrepreneurial Finance, Sentiment Analysis, Linguistic Devices

Suggested Citation

Dorfleitner, Gregor and Hornuf, Lars and Weber, Martina, Dynamics of Investor Communication in Equity Crowdfunding (May 4, 2017). Max Planck Institute for Innovation & Competition Research Paper No. 17-06. Available at SSRN: https://ssrn.com/abstract=2962951 or http://dx.doi.org/10.2139/ssrn.2962951

Gregor Dorfleitner

University of Regensburg - Department of Finance ( email )

Regensburg, 93040
Germany

Lars Hornuf

University of Bremen - Faculty of Business Studies and Economics ( email )

Bremen, D-28359
Germany
+49 89 20348619 (Phone)

HOME PAGE: http://www.hornuf.com

Max Planck Institute for Innovation and Competition ( email )

Marstallplatz 1
Munich, Bayern 80539
Germany

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Martina Weber (Contact Author)

University of Regensburg - Department of Finance ( email )

Regensburg, 93040
Germany

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