Equity Crowdfunding and Offering Page Disclosure

Abstract

This paper provides descriptive evidence about how startup firms communicate with investors on their Regulation Crowdfunding offering page. I find evidence, consistent with prior theory about processing costs and information salience, that a firm’s prior revenues relate strongly to the discussion of financial information on its offering page. This runs counter to indications from Reg CF founders that they think financial information is of less importance to these investors than other information about the company. Consistent with founder beliefs that investors place little weight on firm financials, I find no consistent relation between financial disclosure and a firm meeting its offering goal. Offering success appears more closely related to other elements of disclosure that tell the “story” of the company. The results of this paper can help inform future research in the crowdfunding space, as well as contribute to the literature on how investors process information and disclosure. Data Availability: Publicly available from Regulation Crowdfunding filings on SEC Edgar. JEL Classifications: G23; G24; M13; M41.