Experts or charlatans? ICO analysts and white paper informativeness

A topic modelling analysis of white papers in security token offerings: Which topic matters for funding?

“…Our first contribution to the literature is related to the disclosure of technological components in token offerings. Previous studies of ICOs have provided evidence on specific technological signals, such as patents and the number of technical words in white papers on the funds collected (e.g., Florysiak and Schandlbauer, 2022;Howell et al, 2020;Samieifar and Baur, 2021). In STOs, technology disclosure is also an important subject for investors, and more disclosure on this theme does not refrain investors' interest; on the contrary, spending more space within the white paper to describe the underlying proposed technology seems to boost investors' participation, especially in the healthcare sector, that appears to be a sector with high potential for future growth.…”

“…Second, this study contributes to the literature on the role of disclosure in digital markets Florysiak and Schandlbauer, 2022;Zhang et al, 2019). We apply LDA and show which themes should be effectively disclosed to increase campaign success.…”

“…Compared to more regulated IPOs, the information asymmetry between fundraisers and investors is higher in token offerings because of the large variation between projects and the projects' complicated fundamental technical details (Chen, 2019;. Information asymmetry in token offerings increases the cost of raising capital; thus, it is in the firms' interest to voluntarily disclose information to the public and signal project quality (Blaseg, 2018;Momtaz, 2020) even when the disclosures are viewed as only partially credible (Florysiak and Schandlbauer, 2022).…”

“…Moreover, the average length of white papers has increased over time, thus suggesting that issuers understand the importance of white papers and attempt to signal their quality by publishing longer white papers (Samieifar and Baur, 2021). Florysiak and Schandlbauer (2022) and investigate white papers' content information structure. Florysiak and Schandlbauer (2022) distinguish between standard and informative white papers and find that informative content is unrelated to the trading volume generated after the campaign.…”

“…Florysiak and Schandlbauer (2022) and investigate white papers' content information structure. Florysiak and Schandlbauer (2022) distinguish between standard and informative white papers and find that informative content is unrelated to the trading volume generated after the campaign. However, show that ICOs with unique content raise more funds or are subject to more active trading and higher market values in the post-ICO period.…”