Conflicted Analysts and Initial Coin Offerings

87 Pages Posted: 31 Dec 2020 Last revised: 16 Jun 2023

See all articles by Andreas Barth

Andreas Barth

Goethe University Frankfurt - Department of Finance; Halle Institute for Economic Research; Saarland University

Valerie Laturnus

Goethe University Frankfurt - Department of Finance; Durham University Business School

Sasan Mansouri

University of Groningen - Faculty of Economics and Business; Goethe University Frankfurt; Halle Institute for Economic Research

Alexander F. Wagner

University of Zurich - Department of Finance; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Swiss Finance Institute

Multiple version iconThere are 2 versions of this paper

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

Barth, Andreas and Laturnus, Valerie and Mansouri, Sasan and Wagner, Alexander F., Conflicted Analysts and Initial Coin Offerings (June 6, 2023). Management Science, Forthcoming , Swiss Finance Institute Research Paper No. 21-26, LawFin Working Paper No. 7, Available at SSRN: https://ssrn.com/abstract=3720758 or http://dx.doi.org/10.2139/ssrn.3720758

Andreas Barth (Contact Author)

Goethe University Frankfurt - Department of Finance ( email )

Theodor-W.-Adorno-Platz 3
Frankfurt, 60629
Germany

Halle Institute for Economic Research ( email )

P.O. Box 11 03 61
Kleine Maerkerstrasse 8
D-06017 Halle, 06108
Germany

Saarland University ( email )

Stadtwald
Saarbrucken, Saarland D-66123
Germany

Valerie Laturnus

Goethe University Frankfurt - Department of Finance ( email )

House of Finance
Theodor-W.-Adorno-Platz 3
Frankfurt am Main, DE Hessen 60323
Germany

Durham University Business School ( email )

Mill Hill Lane
Durham, DH1 3LB
United Kingdom

Sasan Mansouri

University of Groningen - Faculty of Economics and Business ( email )

Postbus 72
9700 AB Groningen
Netherlands

Goethe University Frankfurt ( email )

Frankfurt am Main
Germany
015781284258 (Phone)

HOME PAGE: http://www.sasanm.de

Halle Institute for Economic Research

P.O. Box 11 03 61
Kleine Maerkerstrasse 8
D-06017 Halle, 06108
Germany

Alexander F. Wagner

University of Zurich - Department of Finance ( email )

Plattenstr 32
Zurich, 8032
Switzerland

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Swiss Finance Institute ( email )

Switzerland

HOME PAGE: http://www.alex-wagner.com

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