Equity Crowdfunding and Governance: Toward an Integrative Model and Research Agenda

Academy of Management Perspectives, Forthcoming

54 Pages Posted: 29 Jan 2019

See all articles by Douglas J. Cumming

Douglas J. Cumming

Florida Atlantic University

Tom R. Vanacker

Ghent University; University of Exeter Business School

Shaker A. Zahra

University of Minnesota - Twin Cities - Carlson School of Management

Date Written: January 17, 2019

Abstract

Equity crowdfunding markets have grown exponentially over the last few years. Despite this impressive growth, significant informational asymmetry problems may plague these markets, making them susceptible to difficulties and even market failure. In this paper, we depart from current equity crowdfunding research that focuses almost exclusively on the funding success and funding dynamics on platforms to study the effective governance of equity-crowdfunded (ECF) firms and how it relates to these firms’ success. We propose a conceptual model that identifies a multitude of governance mechanisms (e.g., internal or external and formal or informal) that potentially operate in equity crowdfunding markets to reduce adverse selection and moral hazard problems. Further, building on this framework, we offer a roadmap for future research that examines how different governance mechanisms may help in the selection and development of successful ECF firms.

Keywords: Entrepreneurial Finance; Equity Crowdfunding; Governance Systems; Information Asymmetry; Adverse Selection; Moral Hazard

JEL Classification: L26; G24; G30

Suggested Citation

Cumming, Douglas J. and Vanacker, Tom R. and Zahra, Shaker A., Equity Crowdfunding and Governance: Toward an Integrative Model and Research Agenda (January 17, 2019). Academy of Management Perspectives, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3317678

Douglas J. Cumming

Florida Atlantic University ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

HOME PAGE: http://booksite.elsevier.com/9780124095373/

Tom R. Vanacker (Contact Author)

Ghent University ( email )

Sint-Pietersplein 7
Gent, 9000
Belgium

University of Exeter Business School ( email )

Streatham Court
Exeter, EX4 4JH
United Kingdom

Shaker A. Zahra

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

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