Initial coin offerings and the cryptocurrency hype - the moderating role of exogenous and endogenous signals

Initial coin offerings (ICOs) have recently emerged as a new financing instrument for entrepreneurial ventures, spurring economic and academic interest. Nevertheless, the impact of exogenous and endogenous signals on the performance of ICOs as well as the effects of the cryptocurrency hype and subse...

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Bibliographic Details
Published in:Electronic markets 2022-09, Vol.32 (3), p.1691-1705
Main Authors: Thies, Ferdinand, Wallbach, Sören, Wessel, Michael, Besler, Markus, Benlian, Alexander
Format: Article
Language:English
Subjects:
Blockchain
Business and Management
Crowdfunding
Cryptocurrencies
Digital currencies
e-Commerce/e-business
Endogenous
Entrepreneurs
Fundraising
Hypotheses
Impact analysis
Initial coin offering
Initial public offerings
IT in Business
Research Paper
Signaling theory
Social networks
Technological change
Ventures
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Summary:Initial coin offerings (ICOs) have recently emerged as a new financing instrument for entrepreneurial ventures, spurring economic and academic interest. Nevertheless, the impact of exogenous and endogenous signals on the performance of ICOs as well as the effects of the cryptocurrency hype and subsequent downfall of Bitcoin between 2016 and 2019 remain underexplored. We applied ordinary least squares (OLS) regressions based on a dataset containing 1597 ICOs that covers almost 2.5 years. The results show that exogenous and endogenous signals have a significant effect on the funds raised in ICOs. We also find that the Bitcoin price heavily drives the performance of ICOs. However, this hype effect is moderated, as high-quality ICOs are not pegged to these price developments. Revealing the interplay between hypes and signals in the ICO's asset class should broaden the discussion of this emerging digital phenomenon.
ISSN:1422-8890
1019-6781
1422-8890
DOI:10.1007/s12525-021-00460-9