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Invest or regret? An empirical investigation into funding dynamics during the final days of equity crowdfunding campaigns

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Invest or regret? An empirical investigation into funding dynamics during the final days of equity crowdfunding campaigns. / Nguyen, Thang; Cox, Joe; Rich, Judy.

In: Journal of Corporate Finance, Vol. 58, 01.10.2019, p. 784-803.

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@article{d1ce594113f6406eb29bf534f8b19cc8,
title = "Invest or regret? An empirical investigation into funding dynamics during the final days of equity crowdfunding campaigns",
abstract = "In this study, we use the options theory of investment to investigate the funding behaviour of investors in equity crowdfunding. Options theory argues that when faced with uncertainty, investors have the {\textquoteleft}option{\textquoteright} to delay their irreversible investments, although incur a cost in doing so. Demonstrating that investments in equity crowdfunding are characterised by low levels of irreversibility (i.e., they are semi-reversible), moderate costs of delay and high levels of uncertainty, we follow the predictions of options theory in hypothesising that investors may rationally delay their investments in order to gain new information about the quality of businesses in which they invest. We find empirical evidence in support of these arguments when investigating the dynamics of investment activity in campaigns hosted on the UK equity crowdfunding platform Crowdcube. ",
keywords = "Equity crowdfunding, Options theory, Uncertainty, Cost of delay, embargoover12",
author = "Thang Nguyen and Joe Cox and Judy Rich",
year = "2019",
month = oct,
day = "1",
doi = "10.1016/j.jcorpfin.2019.07.011",
language = "English",
volume = "58",
pages = "784--803",
journal = "Journal of Corporate Finance",
issn = "0929-1199",
publisher = "Elsevier",

}

RIS

TY - JOUR

T1 - Invest or regret? An empirical investigation into funding dynamics during the final days of equity crowdfunding campaigns

AU - Nguyen, Thang

AU - Cox, Joe

AU - Rich, Judy

PY - 2019/10/1

Y1 - 2019/10/1

N2 - In this study, we use the options theory of investment to investigate the funding behaviour of investors in equity crowdfunding. Options theory argues that when faced with uncertainty, investors have the ‘option’ to delay their irreversible investments, although incur a cost in doing so. Demonstrating that investments in equity crowdfunding are characterised by low levels of irreversibility (i.e., they are semi-reversible), moderate costs of delay and high levels of uncertainty, we follow the predictions of options theory in hypothesising that investors may rationally delay their investments in order to gain new information about the quality of businesses in which they invest. We find empirical evidence in support of these arguments when investigating the dynamics of investment activity in campaigns hosted on the UK equity crowdfunding platform Crowdcube.

AB - In this study, we use the options theory of investment to investigate the funding behaviour of investors in equity crowdfunding. Options theory argues that when faced with uncertainty, investors have the ‘option’ to delay their irreversible investments, although incur a cost in doing so. Demonstrating that investments in equity crowdfunding are characterised by low levels of irreversibility (i.e., they are semi-reversible), moderate costs of delay and high levels of uncertainty, we follow the predictions of options theory in hypothesising that investors may rationally delay their investments in order to gain new information about the quality of businesses in which they invest. We find empirical evidence in support of these arguments when investigating the dynamics of investment activity in campaigns hosted on the UK equity crowdfunding platform Crowdcube.

KW - Equity crowdfunding

KW - Options theory

KW - Uncertainty

KW - Cost of delay

KW - embargoover12

U2 - 10.1016/j.jcorpfin.2019.07.011

DO - 10.1016/j.jcorpfin.2019.07.011

M3 - Article

VL - 58

SP - 784

EP - 803

JO - Journal of Corporate Finance

JF - Journal of Corporate Finance

SN - 0929-1199

ER -

ID: 15208324