ICO vs. Equity Financing Under Imperfect, Complex and Asymmetric Information

27 Pages Posted: 26 Feb 2020 Last revised: 4 Jan 2021

See all articles by Anton Miglo

Anton Miglo

University of Salford; Birmingham City University

Date Written: January 3, 2021


This paper offers a model of a firm that raises funds for financing an innovative business project and chooses between ICO (initial coin offering) and equity financing. The model is based on information problems associated with both ICO and equity financing well documented in literature. The model provides several implications that have not yet been tested. For example we find that the message complexity can be benefitial for firms conducting ICOs. Also high-quality projects can use ICO as a signal of quality. Thirdly the average size of projects undertaking equity financing is larger than that of firms conducting ICO.

Keywords: asymmetric information, complex information, initial coin offering (ICO), equity financing, signalling

JEL Classification: D82, G32, L11, L26, M13

Suggested Citation

Miglo, Anton, ICO vs. Equity Financing Under Imperfect, Complex and Asymmetric Information (January 3, 2021). Available at SSRN: https://ssrn.com/abstract=3539017 or http://dx.doi.org/10.2139/ssrn.3539017

Anton Miglo (Contact Author)

University of Salford ( email )

Salford, Greater Manchester M5 4WT
United Kingdom

Birmingham City University ( email )

School of Social Sciences
City North Campus
Birmingham, West Midlands B42 2SU
United Kingdom

HOME PAGE: http://https://www.bcu.ac.uk/business-school/about-us/our-staff/anton-miglo

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