Conflicted Analysts and Initial Coin Offerings
Management Science, forthcoming
89 Pages Posted: 31 Dec 2020 Last revised: 9 Jun 2023
There are 2 versions of this paper
Conflicted Analysts and Initial Coin Offerings
Date Written: June 6, 2023
Abstract
This paper studies the contribution of analysts to the functioning and failure of the market for Initial Coin Offerings (ICOs). The assessments of freelancing analysts exhibit biases due to reciprocal interactions of analysts with ICO team members. Even favorably rated ICOs tend to fail raising some capital when a greater portion of their ratings reciprocate prior ratings. 90 days after listing on an exchange the market capitalization relative to the initial funds raised is smaller for tokens with more reciprocal ratings. These findings suggest that conflicts of interest help explain the failure of ICOs.
Keywords: Analysts, Asymmetric Information, Blockchains, Conflicts of Interest, FinTech, Initial Coin Offering (ICO)
JEL Classification: G14, G24, L26, D82, D83
Suggested Citation: Suggested Citation