Initial Coin Offerings: What Rights Do Investors Have (If Any)?

European Journal of Finance, forthcoming

29 Pages Posted: 12 May 2020 Last revised: 30 Nov 2020

See all articles by Xiaoju Zhao

Xiaoju Zhao

affiliation not provided to SSRN

Wenxuan Hou

University of Edinburgh - Business School; Shanghai Lixin University of Accounting and Finance

Jiafu An

University of Aberdeen

Xianda Liu

Yun Zhang

Shanghai Lixin University of Accounting and Finance

Date Written: April 15, 2020

Abstract

This introduction reviews the growing literature on initial coin offerings (ICOs), summaries the articles included this special issue and also provides original evidence of the investor protection on ICOs from 37 countries. We show that the anti-director rights and anti-self-dealing index are positively associated with the country-level raised fund of ICOs after controlling for economic and culture factors. The disclosure quality and investor rights as specified in the Whitepapers are generally poor and they are found to be important to raise more funds in ICOs. We argue that the lack of (self-) discipline poses a threat to investor protections. Around 60% Whitepaper do not disclose information on the use of proceeds or management team. Around 80% ICOs do not entitle investors the rights for dividend or vote. Our findings suggest the needs of regulating ICOs to protect investors.

Keywords: Initial Coin offering, investor protection, shareholder right, disclosure

JEL Classification: G30, G38,

Suggested Citation

Zhao, Xiaoju and Hou, Wenxuan and An, Jiafu and Liu, Xianda and Zhang, Yun, Initial Coin Offerings: What Rights Do Investors Have (If Any)? (April 15, 2020). European Journal of Finance, forthcoming, Available at SSRN: https://ssrn.com/abstract=3576553 or http://dx.doi.org/10.2139/ssrn.3576553

Xiaoju Zhao

affiliation not provided to SSRN

Wenxuan Hou (Contact Author)

University of Edinburgh - Business School ( email )

University of Edinburgh
29 Buccleuch Place
Edinburgh, Scotland EH8 9JS
United Kingdom

HOME PAGE: http://www.wenxuanhou.com

Shanghai Lixin University of Accounting and Finance ( email )

Jiafu An

University of Aberdeen ( email )

King's College
Aberdeen
Aberdeen, AB24 3FX
United Kingdom

HOME PAGE: http://www.jiafuan.net

Yun Zhang

Shanghai Lixin University of Accounting and Finance ( email )

No contact information is available for Xianda Liu

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