Goal Size Signaling in Entrepreneurial Finance: Evidence for Costless and Simultaneous Signaling in Initial Coin Offerings

Initial Coin Offerings (ICOs), a novel form of entrepreneurial finance, are characterized by extreme information asymmetry. To reduce this asymmetry and attract potential investors, entrepreneurs send signals about unobservable characteristics of their ventures to investors. This paper examines the signaling effects of entrepreneurs’ fundraising goals in ICOs. Using a hand-collected dataset of more than 400 ICOs, we show that the relationship between the size of fundraising goals and actual funding obtained follows curvilinear shapes. We also find that these curvilinear shapes are contingent on the presence of simultaneously sent, costless signals. Our findings enhance understanding how fundraising goals affect fundraising success and provide evidence that in ICOs costless signals are interpreted by investors in conjunction with each other

Quality revealing versus overstating in equity crowdfunding

We gratefuly acknowledge the financial support from the Social Sciences and Humanities Research Council (SSHRC) of Canada.Peer reviewedPostprin

The Use of Online Panel Data in Management Research: A Review and Recommendations

Management scholars have long depended on convenience samples to conduct research involving human participants. However, the past decade has seen an emergence of a new convenience sample: online panels and online panel participants. The data these participants provide—online panel data (OPD)—has been embraced by many management scholars owing to the numerous benefits it provides over “traditional” convenience samples. Despite those advantages, OPD has not been warmly received by all. Currently, there is a divide in the field over the appropriateness of OPD in management scholarship. Our review takes aim at the divide with the goal of providing a common understanding of OPD and its utility and providing recommendations regarding when and how to use OPD and how and where to publish it. To accomplish these goals, we inventoried and reviewed OPD use across 13 management journals spanning 2006 to 2017. Our search resulted in 804 OPD-based studies across 439 articles. Notably, our search also identified 26 online panel platforms (“brokers”) used to connect researchers with online panel participants. Importantly, we offer specific guidance to authors, reviewers, and editors, having implications for both micro and macro management scholars

Employee recognition and performance: a field experiment

This paper reports the results from a controlled field experiment designed to investigate the causal effect of unannounced, public recognition on employee performance. We hired more than 300 employees to work on a three-hour data-entry task. In a random sample of work groups, workers unexpectedly received recognition after two hours of work. We find that recognition increases subsequent performance substantially, and particularly when recognition is exclusively provided to the best performers. Remarkably, workers who did not receive recognition are mainly responsible for this performance increase. Our results are consistent with workers having a preference for conformity and being reciprocal at the same time

Message Framing in P2P Lending Relationships

This paper investigates whether language and associated message framing (low-cost signal) can provide a solution to the risks generated by asymmetric information in P2P lending, drawing on the signalling and message-framing theories. First, it examines the extent to which message framing is associated with funding outcomes in the context of P2P lending; second, it investigates whether positive message framing reinforces the positive impact of credit ratings (high-cost signal) on funding outcomes. Our analysis is conducted on a dataset of 33028 listings of potential borrowers from a Chinese P2P lending platform using the Heckman selection models. We find that the use of positively framed messages is positively associated with positive funding outcomes and enhances the positive impact of the credit ratings on funding outcomes. Our results contribute to the literature on the effectiveness of low-cost signals in of Internet-based interactions while highlighting complementarities between different types of signals in P2P lending

Law and norms: empirical evidence

A large theoretical literature argues laws exert a causal effect on norms. This paper is the first to provide a clean empirical test of the proposition. Using an incentivized vignette experiment, we directly measure social norms relating to actions subject to legal thresholds. Results from three samples with around 800 subjects drawn from universities in the UK and China, and the UK general population, show laws often, but not always, influence norms. The strength of the effect varies across different scenarios, with some evidence that it is more powerful when law-breaking is more likely to be intentional and accurately measurable

Law and norms: empirical evidence

A large theoretical literature argues laws exert a causal effect on norms. This paper is the first to provide a clean empirical test of the proposition. Using an incentivized vignette experiment, we directly measure social norms relating to actions subject to legal thresholds. Results from three samples with around 800 subjects drawn from universities in the UK and China, and the UK general population, show laws often, but not always, influence norms. The strength of the effect varies across different scenarios, with some evidence that it is more powerful when law-breaking is more likely to be intentional and accurately measurable

Essays on Peer to Peer Lending

The Peer-to-Peer (P2P) lending model has become increasingly popular in China in recent years. In 2012, there are only 298 P2P platforms operating in China and loan volume is 22.9 billion RMB while in the first half of 2018, there are 1881 P2P platforms and trading volume has reached 7.33 trillion RMB. Although both number of platforms and transaction volume have increased significantly, severe asymmetric information still discourages participants. This doctoral thesis uses three empirical chapters to investigate the P2P lending market in China. Drawing on Message framing and signaling theory, we first examines the extent to which message framing is associated with funding outcomes receive in the context of P2P lending and whether positive message framing reinforces the positive impact of credit ratings on funding outcomes. Using a Heckman two stage model, we find that the use of positively framed messages is positively associated with positive funding outcomes. Besides, positive message framing enhances the positive impact of the credit ratings (an example of costly signals) on funding outcomes. The results contribute to the literature on the effectiveness of cheap signals in the context of Internet-based interactions while highlighting complementarities between different types of signals in P2P lending. We then investigate the role of psychological distancing and language intensity in P2P funding performance. We bridge the P2P lending literature and psycholinguistics literature and set out to explain how psychological distancing manifested by linguistic styles can influence lenders’ decision on P2P funding campaign. We argue find that linguistic styles related to psychological distancing have a negative impact onare negatively related to P2P funding success. Moreover, the language intensity tends to strengthen the negative relationship between psychological distancing and funding success. Our empirical results provide general support for the argument. This finding is consistent with psycholinguistics literature which suggests that psychological distancing is associated with negative interpersonal outcome (Simmons et al, 2005; Revenstorf et al, 1984). Specifically, the number of “you” and the number of negations used in borrowers’ description are negatively related to the willingness of the lender to support the funding campaign. The intensive language negatively strengths the relationship between the funding performance and number of “you” but does not apply to number of negations. Lastly, we investigate the funding performance of the financial excluded borrower in a large P2P lending platform. The association of financial technology (fintech) and financial exclusion has attracted attention since rapid growth of fintech innovation. Using loan-level data from a lending Chinese P2P company, we find there is a negative indirect effect of financial exclusion on funding success through credit score. In a moderated mediation analysis, we also find new business model such as offline authentication and education qualification positively moderates the linkage between the financial excluded and credit score and therefore negative indirect effect of financial exclusion on funding success is overturned when the excluded borrower has conducted offline authentication and obtained higher education qualification. In the end, we examine the determinants of offline authentication decision. We find the borrowers in a city with better financial infrastructure are more willing to conduct authentication. However, the financial excluded borrowers are less likely to conduct offline authentication