Initial Coin Offerings: Financing Growth with Cryptocurrency Token Sales

Howell, Sabrina T.; Niessner, Marina; Yermack, David

doi:10.2139/ssrn.3201259

Cited by 13 publications

(6 citation statements)

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“…Various authors have investigated the properties of ICOs and cryptocurrencies, including Lyandres, Palazzo, and Rabetti (), who reflect on the similarities between cryptocurrencies and other securities, Bourveau, DeGoerge, Ellahie, and Macciocci (), who investigate information provision on ICOs, while Lee, Li, and Shi () considers information aggregation. Finally, Howell, Niessner, and Yermack () provide detailed analyses of ICO markets.…”

Section: Introductionmentioning

confidence: 99%

Cryptocurrencies: Stylized facts on a new investible instrument

Parlour

Rajan

2019

Financial Management

122

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We present stylized facts on the asset pricing properties of cryptocurrencies: summary statistics on cryptocurrency return properties and measures of common variation for secondary market returns on 222 digital coins. In our sample, secondary market returns of all other currencies are strongly correlated with Bitcoin returns. We also provide some investment characteristics of a sample of 64 initial coin offerings.

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Section: Introductionmentioning

confidence: 99%

Cryptocurrencies: Stylized facts on a new investible instrument

Parlour

Rajan

2019

Financial Management

122

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“…On the other hand, Momtaz (2018) present evidence that the loyalty of CEOs facilitates the attraction of investors and Rhue (2018) demonstrates that the code quality as well as website characteristics and the degree of social media presence influence the ICO success. Furthermore, Howell et al (2018) find that ICO success is associated with disclosure and credible commitment of the founder team while conclude that the business and technical background of founders as well as the size of their social network influences the success of respective ICOs. Thus, Fisch and Momtaz (2019) are one of the very first who examine the influence of VC investors in the context of ICOs and demonstrate their beneficial impact.…”

Section: Introductionmentioning

confidence: 89%

“…The second research stream in this area, which is even more relevant for our research setting, concerns ICOs, their application and impact. Howell et al (2018) discuss in their paper if ICOs are an alternative to more traditional funding sources for new ventures, such as angel investors, VC investors, initial public offerings (IPOs), or pre-sale crowdfunding platforms like Kickstarter. Catalini and Gans (2018) examine under which conditions entrepreneurs may prefer ICOs vs. competitive VC markets.…”

Section: Evolving Of Icos As Financing Instrumentmentioning

confidence: 99%

“…First, ICOs help to overcome moral hazard and reduce information asymmetries (Momtaz 2018(Momtaz , 2019) by relying on immutable, non-negotiable governance terms when using blockchain technology (Howell et al 2018). Respective governance terms are available to investors ex ante to their investment decision and cannot be changed ex post, signaling a strong commitment of the founding team on venture governance.…”

Section: Background Of Icos and Interplay With Other Funding Sourcesmentioning

confidence: 99%

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Which investors’ characteristics are beneficial for initial coin offerings? Evidence from blockchain technology-based firms

Hackober

Bock

2021

J Bus Econ

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Initial coin offerings have recently become one of the most important funding resources for ventures in the blockchain area. However, often ventures do not rely solely on initial coin offerings as funding source but receive also investments from more established investors prior or during their initial coin offering. In particular, blockchain related ventures have drawn the attention of (corporate) venture capitalists but only less is known on the interplay of these different funding sources and their influence on initial coin offerings as well as on ventures’ further development. Based on the signaling theory as well as the resource-based-view our empirical study find that venture capital investors as well as corporate venture capital investors have a significantly positive effect on initial coin offerings. Further, we find that the reputation, the time of treatment as well as the specialization of investors have a positive influence on the initial coin offering. Finally, our results indicate that the positive effect of venture capital investors as well as the specialization of an investor continues to influence blockchain based ventures’ success in the mid-term.

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“…Due to this dominance, most research has simply used a dummy variable for issuance on Ethereum as opposed to other platforms. Both Fisch (2019) and Howell et al (2018) find positive effects of using Ethereum on the amount raised in ICOs.…”

Section: Ico Characteristicsmentioning

confidence: 98%

Effects of initial coin offering characteristics on cross-listing returns

Meyer¹,

Ante

2020

Digit Finance

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The low level of regulation and publication requirements in cryptocurrency markets leads to little information on cryptocurrency projects being publicly available. Against the background of high information asymmetry, the interpretation of the available information is all the more important. This paper examines how initial coin offering (ICO) characteristics affect cross-listing returns, i.e. whether or not available information is a valuable market signal of quality. For this purpose, we analyze 250 cross-listings of 135 different tokens issued via ICOs and calculate abnormal returns for specific samples using event study methodology. We find that cross-listing returns are driven by success in terms of token performance and project funding, as well as by jurisdiction-specific characteristics like the extent of regulation and domestic market size. Other characteristics such as the choice or change of blockchain infrastructure, token distribution across investors and the project team, campaign duration and whitepaper characteristics also seem to influence perceived project quality and thus cross-listing returns. The results contribute to the literature on cross-listings, cryptocurrency markets and entrepreneurial finance in the form of ICOs. They also make it possible to interpret the information available on the market and enable investors, project teams and cryptocurrency exchanges to evaluate probable market reactions to cross-listings.

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Initial Coin Offerings: Financing Growth with Cryptocurrency Token Sales

Cited by 13 publications

References 100 publications

Cryptocurrencies: Stylized facts on a new investible instrument

Cryptocurrencies: Stylized facts on a new investible instrument

Which investors’ characteristics are beneficial for initial coin offerings? Evidence from blockchain technology-based firms

Effects of initial coin offering characteristics on cross-listing returns

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