Initial Coin Offerings: Early Evidence on the Role of Disclosure in the Unregulated Crypto Market

73 Pages Posted: 9 Jun 2018 Last revised: 27 Jul 2018

Thomas Bourveau

Columbia Business School - Accounting, Business Law & Taxation

Emmanuel T. De George

London Business School - Department of Accounting

Atif Ellahie

University of Utah - David Eccles School of Business

Daniele Macciocchi

University of Utah - David Eccles School of Business

Date Written: July 2018

Abstract

We provide initial descriptive evidence on the emerging crypto capital market, and use this unique unregulated setting to examine the role of disclosure for capital market outcomes. We analyze a comprehensive global sample of more than 750 initial coin offerings (“ICOs”) with data from April 2014 to May 2018 and find that the ICO market has emerged as a significant financing channel with over $13 billion raised by a diverse set of issuers from more than 50 countries. We also find that the likelihood of successfully raising funds is positively associated with issuers’ disclosure, the information environment, and hype. Further, weaker information environments are associated with higher crash risk, illiquidity, and volatility. Finally, we present evidence on the capital market benefits of new information intermediaries that have naturally evolved in this unregulated market to monitor and assess the quality of tokens issued in an ICO. Overall, our study provides novel and timely evidence on the role of disclosure in this completely unregulated capital market.

Keywords: initial coin offering, crypto-currency, crypto-token, crowdfunding, disclosure, unregulated markets

JEL Classification: G1, G2, G3, M4

Suggested Citation

Bourveau, Thomas and De George, Emmanuel T. and Ellahie, Atif and Macciocchi, Daniele, Initial Coin Offerings: Early Evidence on the Role of Disclosure in the Unregulated Crypto Market (July 2018). 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

London Business School - Department of Accounting ( email )

Regent's Park
London, NW1 4SA
United Kingdom
+44 (0)20 7000 8118 (Phone)
+44 (0)20 7000 7001 (Fax)

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 Utah - David Eccles School of Business ( email )

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

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