Equity crowdfunding, shareholder structures, and firm performance
By Xavier Walthoff‐Borm, Tom Vanacker, Veroniek Collewaert. Corporate governance: An International Review, 2018
125 citations recorded by the source corpus.
Manuscript Type: Empirical Research Question/Issue: This paper provides a first-time glimpse into the post-campaign financial and innovative performance of equity-crowdfunded (ECF) and matched non-equitycrowdfunded (NECF) firms. We further investigate how direct and nominee shareholder structures in ECF firms are associated with firm performance. Research Findings/Insights: We find that ECF firms have 8.5 times higher failure rates than matched NECF firms. However, 3.4 times more ECF firms have patent applications than matched NECF firms. Within the group of ECF firms, we find that ECF firms financed through a nominee structure make smaller losses, while ECF firms financed through a direct shareholder structure have more new patent applications, including foreign patent applications. Theoretical/Academic Implications: Our findings suggest that there are important adverse selection issues on equity crowdfunding platforms, although these platforms also serve as a catalyst for innovative activities. Moreover, our findings suggest that there is a more complex relationship between dispersed versus concentrated crowd shareholders and firm performance than currently assumed in the literature. Practitioner/Policy Implications: For policymakers and crowdfunding platforms, investor protection against adverse selection will be important to ensure the sustainability of equity crowdfunding markets. For entrepreneurs and crowd investors, our study highlights how equity crowdfunding and the adopted shareholder structure relate to short-term firm performance.
Subfields: Accounting, Economics and Econometrics, Management Information Systems
View Paper: https://www.semanticscholar.org/paper/e0d901d136ad1771362a0e0dd272236f8dc4a488
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Citations in the corpus
- What impact does equity crowdfunding have on SME innovation and growth? An empirical study (2019, background): “It is not only in equity crowdfunding that the wisdomof-crowd effect can be found (Walthoff-Borm et al. 2018); lending-based crowdfunding (Bruton et al. 2017) is the other similar context in which we can see this principle operating.”
- Equity Crowdfunding and Governance: Toward an Integrative Model and Research Agenda (2019, unknown): “Existing equity crowdfunding research, for instance, focuses on the firms that are already listed on specific platforms (e.g., Walthoff-Borm et al., 2018a).”