Journal
RESEARCH POLICY
Volume 48, Issue 8, Pages -Publisher
ELSEVIER SCIENCE BV
DOI: 10.1016/j.respol.2019.01.014
Keywords
Equity crowdfunding; Crowdfunding; Corporate governance; Entrepreneurial finance; Voting rights; Ownership and control
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This paper examines for the first time dual-class equity crowdfunding as a digital ownership model. Unique to this context, companies can set an investment threshold under which no voting rights are granted, making the issuance of Class A vs. Class B shares, depending on individual investors. Using a sample of 491 offerings on the UK platform Crowdcube from 2011 to 2015, we find that a higher separation between ownership and control rights lowers the probability of success of the offering, the likelihood of attracting professional investors, as well as the long-run prospects. Different from small investors, professional investors care about the implementation of a threshold for the attribution of voting rights and often bid the Class A threshold exactly. Family businesses, although less attractive to small investors, are relatively safer investments, because of their lower chances of failure.
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