The Crowdfunding of Altruism

Luisa Faust, Maura Kolbe, Sasan Mansouri and Paul P. Momtaz
Additional contact information
Luisa Faust: House of Finance, Goethe-University Frankfurt, Theodor-W.-Adorno-Platz 3, 60323 Frankfurt, Germany
Maura Kolbe: House of Finance, Goethe-University Frankfurt, Theodor-W.-Adorno-Platz 3, 60323 Frankfurt, Germany
Sasan Mansouri: House of Finance, Goethe-University Frankfurt, Theodor-W.-Adorno-Platz 3, 60323 Frankfurt, Germany
Paul P. Momtaz: House of Finance, Goethe-University Frankfurt, Theodor-W.-Adorno-Platz 3, 60323 Frankfurt, Germany

JRFM, 2022, vol. 15, issue 3, 1-29

Abstract: This paper introduces a machine learning approach to quantify altruism from the linguistic style of textual documents. We apply our method to a central question in (social) entrepreneurship: How does altruism impact entrepreneurial success? Specifically, we examine the effects of altruism on crowdfunding outcomes in Initial Coin Offerings (ICOs). The main result suggests that altruism and ICO firm valuation are negatively related. We, then, explore several channels to shed some light on whether the negative altruism-valuation relation is causal. Our findings suggest that it is not altruism that causes lower firm valuation; rather, low-quality entrepreneurs select into altruistic projects, while the marginal effect of altruism on high-quality entrepreneurs is actually positive. Altruism increases the funding amount in ICOs in the presence of high-quality projects, low asymmetric information, and strong corporate governance.

Keywords: altruism; machine learning; crowdfunding; token offerings; Initial Coin Offering; entrepreneurial finance (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.mdpi.com/1911-8074/15/3/138/pdf (application/pdf)
https://www.mdpi.com/1911-8074/15/3/138/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jjrfmx:v:15:y:2022:i:3:p:138-:d:771385

Access Statistics for this article

JRFM is currently edited by Ms. Chelthy Cheng

More articles in JRFM from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().