On Crowdfunding Success: Firm and Owner Attributes and Social Networking

This study investigates the role of platform-mandated disclosure, firm and owner attributes and social networking activity on the success of crowdfunding campaigns. It is found that more stringent platform disclosure requirements and risk warnings are not associated with success of crowdfunding campaigns. However, owner experience and firm-specific financial statement information are correlated with crowdfunding success. Moreover, social networking, at least as measured by the frequency of social media contacts, also plays a role. Those two findings combined suggest that social media encourage crowdinvestors’ rational herding and make crowdfunding investment decisions that are informed by both the wisdom of the crowd and the quality of the opportunity.