The Wisdom of Crowds in FinTech: Evidence from Initial Coin Offerings
Review of Corporate Finance Studies, forthcoming
73 Pages Posted: 21 Jun 2018 Last revised: 17 Dec 2021
Date Written: January 5, 2021
Certification by analysts on a FinTech platform that harnesses the "wisdom of crowds" is associated with successful initial coin offerings (ICOs). We show that favorable ratings by a group of analysts with diverse backgrounds positively predict fundraising success and long-run token performance. Analyst ratings also help detect potential fraud ex ante. We document that analysts have career concerns and are incentivized by the platform to issue informative ratings. Overall, our results suggest that a market-based certification process that relies on a diverse group of individuals is at play in financing blockchain startups.
Keywords: Crowdsourcing, Wisdom of Crowds, ICO, Blockchain, FinTech, Analyst expertise, Analyst incentives
JEL Classification: D82, G11, G24, G32, G34, L26
Suggested Citation: Suggested Citation