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Pricing Shares in Equity Crowdfunding

Lars Hornuf and Matthias Neuenkirch

No 2015-07, Research Papers in Economics from University of Trier, Department of Economics

Abstract: We analyze the pricing of cash flow rights in start-up companies using a unique data set of 44 equity crowdfunding campaigns. Our sample consists of 499 backers who invested during the period from November 6, 2011, to March 25, 2014, on the German equity crowdfunding portal Innovestment. In contrast with all other European equity crowdfunding portals, Innovestment runs a multi-unit second-price auction in which backers themselves can specify the price of an investment ticket. We exploit this unique auction mechanism to analyze backers’ willingness to pay for cash flow rights. We find that campaign characteristics, investor sophistication, progress in funding, herding, and stock market volatility influence backers’ willingness to pay in an economically meaningful manner while geographic distance, learning effects, and sniping at the end of an auction have no effect.indicate that portal design and self-regulation might well trump government rules in the pursuit to protect investors.

Keywords: Auctions; Equity crowdfunding; Valuation of shares (search for similar items in EconPapers)
JEL-codes: D44 G11 M13 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2015
New Economics Papers: this item is included in nep-cfn, nep-eur and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Journal Article: Pricing shares in equity crowdfunding (2017) Downloads
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