The Role of Information Content in Unverifiable Disclosures on Crowdfunding Success: Evidence from Kickstarter

• In Event: Understanding Investor Behavior

Abstract

Despite severe agency costs, crowdfunding is an increasingly relevant part of the capital acquisition landscape for young businesses and has influenced Congressional regulation that greatly expands the sale of equity via crowdfunding. In this study, we build on literature on crowdfunding, voluntary disclosure, and content analysis by examining how voluntary disclosure impacts the likelihood of funding, the magnitude of funds raised, and the number of backers attracted on one of the most successful crowdfunding websites, Kickstarter. Using a large sample of over two years of projects (102,967 projects), we find that the volume and content of voluntary disclosure impact funding outcomes, and that those main effects differ based on discloser credibility and market competition.

Authors

• Neal Michael Snow, Lehigh University

• Patrick Wheeler, University of South Florida

• James D Whitworth, University of North Carolina-Wilmington