ICO Analysts

Abstract

Initial Coin Offerings (ICOs) provide an opportunity to study the role of information frictions for financial markets in a setting with relatively little regulation. This paper analyzes the role of freelancing human experts (ICO analysts) as information intermediaries. ICO analyst assessments vary in quality and exhibit biases due to the reciprocal interactions of ICO analysts with ICO team members. Investors assign more weight to ratings by high-quality analysts, and they discount reciprocal ratings. Overall, the findings suggest that on this market, too, market discipline works to some extent and intermediaries can play an important role in mitigating information asymmetries.

Keywords: Analysts, Asymmetric Information, FinTech, Initial Coin Offering (ICO)

JEL Classification: G14, G24, L26, D82, D83