Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/121440
Authors: 
Hornuf, Lars
Schwienbacher, Armin
Year of Publication: 
2015
Series/Report no.: 
Research Papers in Economics 9/15
Abstract: 
We use hand-collected data from four German crowdinvesting portals to analyze what determines individual investment decisions in crowdinvesting. In contrast with the crowdfunding campaigns on Kickstarter where the typical pattern of project support is U-shaped, we find crowdinvesting dynamics to be L-shaped under a first-come, first-serve mechanism and only U-shaped under a sealed-bid second-price auction. The evidence further shows that investors base their decisions on information provided by the entrepreneur in form of updates during the campaign and by the investment behavior and comments of other crowd investors. We also find evidence for herding behavior. As legislators around the world increasingly regulate crowdinvesting activities, knowing how crowd investors behave under no formal information disclosure provides important insights for issuers, portals, and lawmakers.
Subjects: 
crowdinvesting
startups
securities issuance
IPO investment dynamics
entrepreneurial finance
JEL: 
G11
G20
K22
M13
Document Type: 
Working Paper

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