Can an early exit mechanism attract more pledges in equity-based crowdfunding? Evidence from China

Gongbing Bi and Jiancheng Lv

Finance Research Letters, 2023, vol. 56, issue C

Abstract: This paper aims to explore the impact of the early exit mechanism on equity-based crowdfunding performance. We conducted the empirical test using the method of propensity score matching on the data from a Chinese crowdfunding platform. The results demonstrate that the adoption of early exit options hurts the funding performance. This negative impact is mainly derived from the value-added investors’ dislike for such an exit mechanism. In contrast, small investors have no apparent preference for projects with or without early exit options.

Keywords: Early exit options; Equity-based crowdfunding; Funding performance; Propensity score matching (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:56:y:2023:i:c:s154461232300538x

DOI: 10.1016/j.frl.2023.104166

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