Protecting Investors in Equity Crowdfunding: An Empirical Analysis of the Small Investor Protection Act
Maximilian Goethner (),
Lars Hornuf () and
Additional contact information
Maximilian Goethner: Friedrich Schiller University Jena
Lars Hornuf: University of Bremen, and Max Planck Institute for Innovation and Competition, Munich
No 2020-009, Jena Economic Research Papers from Friedrich-Schiller-University Jena
During the past decade, equity crowdfunding (ECF) has emerged as an alternative funding channel for startup firms. In Germany, the Small Investor Protection Act became binding in July 2015, with the legislative goal to protect investors engaging in this new asset class. Since then, investors pledging more than 1,000 EUR now must self-report their income and wealth. Investing more than 10,000 EUR in a single ECF issuer is only possible through a corporate entity. We examine how the Small Investor Protection Act has affected investor behavior at Companisto, Germanyâ€™s largest ECF portal for startup firms. The results show that after the new law became binding, sophisticated investors invest less on average while casual investors invest more. Moreover, the signaling capacity of large investments has disappeared.
Keywords: Equity crowdfunding; Crowdinvesting; Investor protection (search for similar items in EconPapers)
JEL-codes: E22 G18 G38 K22 L26 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cfn, nep-ent, nep-eur and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Journal Article: Protecting investors in equity crowdfunding: An empirical analysis of the small investor protection act (2021)
Working Paper: Protecting Investors in Equity Crowdfunding: An Empirical Analysis of the Small Investor Protection Act (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:jrp:jrpwrp:2020-009
Access Statistics for this paper
More papers in Jena Economic Research Papers from Friedrich-Schiller-University Jena
Bibliographic data for series maintained by Markus Pasche ().