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Equity crowdfunding: First resort or last resort?

Walthoff-Borm, Xavier, Armin Schwienbacher and Tom Vanacker

Journal of Business Venturing, 2018, vol. 33, issue 4, 513-533

Abstract: Prior research has focused on the factors that affect funding success on equity crowdfunding platforms, but a detailed understanding of the factors that drive firms to search for equity crowdfunding in the first place is lacking. Drawing on the pecking order theory, we argue that firms list on equity crowdfunding platforms as a “last resort”—that is, when they lack internal funds and additional debt capacity. In line with the pecking order theory, the empirical evidence shows that firms listed on equity crowdfunding platforms are less profitable, more often have excessive debt levels, and have more intangible assets than matched firms not listed on these platforms. We discuss the implications for theory and practice.

Keywords: Entrepreneurial finance; Equity crowdfunding; Financial decision making; Pecking order theory (search for similar items in EconPapers)
Date: 2018
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