Cheap Signals in Security Token Offerings (STOs)

Ante, L. & Fiedler, I. (2020) Cheap Signals in Security Token Offerings (STOs). Quantitative Finance and Economics 4(4) 608-639. doi: 10.3934/QFE.2020028

32 Pages Posted: 11 Apr 2019 Last revised: 17 Oct 2020

See all articles by Lennart Ante

Lennart Ante

Blockchain Research Lab

Ingo Fiedler

University of Hamburg - Institute of Commercial Law

Date Written: September 21, 2020

Abstract

Blockchain-based security token offerings (STOs) provide a new way of crowdfunding and corporate financing. Building on signalling theory, this paper examines 1) whether companies conducting an STO make use of cheap signals to influence investment behaviour and 2) if such use of cheap signals is effective. We analyse a dataset of 151 STOs and identify that cheap signals of human capital and social media are used by projects and have a positive effect on funding success, while cheap signals of external network size negatively affect funding success. We argue that these signals can be exploited by STOs to influence investor behaviour raising concerns for investor protection.

Keywords: Entrepreneurial Finance, Blockchain, Crowdfunding, Initial Coin Offering, Initial Public Offering, Corporate Finance

Suggested Citation

Ante, Lennart and Fiedler, Ingo, Cheap Signals in Security Token Offerings (STOs) (September 21, 2020). Ante, L. & Fiedler, I. (2020) Cheap Signals in Security Token Offerings (STOs). Quantitative Finance and Economics 4(4) 608-639. doi: 10.3934/QFE.2020028 , Available at SSRN: https://ssrn.com/abstract=3356303 or http://dx.doi.org/10.2139/ssrn.3356303

Lennart Ante (Contact Author)

Blockchain Research Lab ( email )

Colonnaden 72
Hamburg, 22303
Germany

Ingo Fiedler

University of Hamburg - Institute of Commercial Law ( email )

Max-Brauer-Allee 60
Hamburg, 22765
Germany
+4940428386539 (Phone)
+4940428386443 (Fax)

HOME PAGE: http://www.wiso.uni-hamburg.de/institute/irdw

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