Information Intermediaries in the Crypto-Tokens Market

56 Pages Posted: 9 Jun 2018 Last revised: 24 May 2019

See all articles by Thomas Bourveau

Thomas Bourveau

Columbia Business School - Accounting, Business Law & Taxation

Emmanuel T. De George

University of Miami

Atif Ellahie

University of Utah - David Eccles School of Business

Daniele Macciocchi

University of Miami Herbert Business School

Date Written: May 1, 2019

Abstract

Using a global sample of 2,357 attempted initial coin offerings (ICOs), we examine whether ICO rating providers act as information intermediaries that may reduce information asymmetry and the associated adverse selection problem in the crypto-tokens market. We find that issuer-supplied voluntary disclosures alone are not consistently associated with ICO success and post-ICO performance. In contrast, our analysis suggests that ICOs with higher ratings are more likely to succeed in raising funds, and list on a crypto-exchange. They are also more liquid and less likely to crash after the completion of the ICO. Further, we decompose ratings into algorithmic ratings and ratings by crypto experts and find that while algorithmic ratings capture voluntary disclosure quantity, crypto-expert ratings capture assessments of underlying ICO quality. We document that both rating components incrementally predict the success and post-listing performance of ICOs. Overall, our results suggest that information intermediaries have helped the functioning of the unregulated crypto-tokens market.

Keywords: initial coin offering, crypto-token, disclosure, information intermediaries, ratings, unregulated capital markets

JEL Classification: G1, G2, G3, M4

Suggested Citation

Bourveau, Thomas and De George, Emmanuel T. and Ellahie, Atif and Macciocchi, Daniele, Information Intermediaries in the Crypto-Tokens Market (May 1, 2019). Available at SSRN: https://ssrn.com/abstract=3193392 or http://dx.doi.org/10.2139/ssrn.3193392

Thomas Bourveau

Columbia Business School - Accounting, Business Law & Taxation ( email )

3022 Broadway
New York, NY 10027
United States

Emmanuel T. De George

University of Miami ( email )

Coral Gables, FL 33146-6531
United States
305-284-2273 (Phone)

Atif Ellahie (Contact Author)

University of Utah - David Eccles School of Business ( email )

1645 E Campus Center Dr
Salt Lake City, UT 84112-9303
United States

Daniele Macciocchi

University of Miami Herbert Business School ( email )

P.O. Box 248126
Florida
Coral Gables, FL 33124
United States

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