Quality Signals and Market Performance: Insights from Post-Initial Coin Offerings

Abstract

Despite significant attention from investors, entrepreneurs, and policymakers, the factors contributing to post- Initial Coin offerings’ (ICOs) market stability remain unclear. In this study, we investigate the antecedents of post-ICO market stability by drawing on signalling theory. We analyse a dataset spanning daily observations from 2016 to 2021 comprising 254 ICOs sourced from coinmarketcap.com. Our findings reveal that high-quality signals, such as venture capital backing, distinguished advisory teams, and project code availability, effectively mitigate information asymmetry and market volatility. These signals foster trust among investors, encourage increased investment, and bolster ICO market stability. By enhancing the understanding of post-ICO stability and reducing investor uncertainty, we can help investors make informed decisions in ICOs.

Keywords: Fintech, Initial coin offering, Venture capital, Market volatility