Initial Coin Offerings: Financing Growth with Cryptocurrency Token Sales

71 Pages Posted: 16 Jul 2018 Last revised: 14 Sep 2019

See all articles by Sabrina Howell

Sabrina Howell

New York University (NYU) - Leonard N. Stern School of Business

Marina Niessner

AQR Capital Management, LLC

David Yermack

New York University (NYU) - Stern School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: September 3, 2019

Abstract

Initial coin offerings (ICOs) have emerged as a new mechanism for entrepreneurial finance, with parallels to initial public offerings, venture capital, and pre-sale crowdfunding. In a sample of more than 1,500 ICOs that collectively raise $12.9 billion, we examine which issuer and ICO characteristics predict successful real outcomes (increasing issuer employment and avoiding enterprise failure). Success is associated with disclosure, credible commitment to the project, and quality signals. An instrumental variables analysis finds that ICO token exchange listing causes higher future employment, indicating that access to token liquidity has important real consequences for the enterprise.

Keywords: Initial coin offerings, Fintech, blockchain

JEL Classification: G24, G32, L26

Suggested Citation

Howell, Sabrina and Niessner, Marina and Yermack, David, Initial Coin Offerings: Financing Growth with Cryptocurrency Token Sales (September 3, 2019). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 564/2018. Available at SSRN: https://ssrn.com/abstract=3201259 or http://dx.doi.org/10.2139/ssrn.3201259

Sabrina Howell (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States
212-998-0913 (Phone)

HOME PAGE: http://www.sabrina-howell.com

Marina Niessner

AQR Capital Management, LLC ( email )

Greenwich, CT
United States

David Yermack

New York University (NYU) - Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY 10012-1126
United States
212-998-0357 (Phone)
212-995-4220 (Fax)

HOME PAGE: http://www.stern.nyu.edu/~dyermack

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