Equity Crowdfunding and Governance: Toward an Integrative Model and Research Agenda
Academy of Management Perspectives, Forthcoming
54 Pages Posted: 29 Jan 2019
Date Written: January 17, 2019
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: Suggested Citation