The Information Content of ICO White Papers

Florysiak, David; Schandlbauer, Alexander

doi:10.2139/ssrn.3265007

Cited by 28 publications

(20 citation statements)

References 81 publications

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“…On liquidity see Bourveau et al (2018), Lyandres et al (2018), and Fisch and Momtaz (2019). On trading volume see Florysiak and Schandlbauer (2018). use survey data to study the motivations of ICO investors.…”

Section: The Ico Marketmentioning

confidence: 99%

Initial Coin Offerings: Financing Growth with Cryptocurrency Token Sales

Howell

Niessner

Yermack

2019

The Review of Financial Studies

393

224

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Initial coin offerings (ICOs) have emerged as a new mechanism for entrepreneurial finance, with parallels to initial public offerings, venture capital, and presale crowdfunding. In a sample of more than 1,500 ICOs that collectively raise ${\$}$12.9 billion, we examine which issuer and ICO characteristics predict successful real outcomes (increasing issuer employment and avoiding enterprise failure). Success is associated with disclosure, credible commitment to the project, and quality signals. An instrumental variables analysis finds that ICO token exchange listing causes higher future employment, indicating that access to token liquidity has important real consequences for the enterprise.

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Section: The Ico Marketmentioning

confidence: 99%

Initial Coin Offerings: Financing Growth with Cryptocurrency Token Sales

Howell

Niessner

Yermack

2019

The Review of Financial Studies

393

224

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“…The evidence complements a series of papers that focus on traditional disclosure channels in the ICO market, such as social media and 'whitepapers,' unregulated documents in which ICO teams describe their business. (Florysiak and Schandlbauer 2018;Lee, Li, and Shin 2018;Fisch 2018;Bourveau et al 2018). While documenting the benefits of blockchain technology, this paper also highlights that only a small and declining portion of ICOs are making the most of this technology, which could explain the presence of scams in the ICO market.…”

Section: Introductionmentioning

confidence: 83%

Building Trust from Code: Disclosure Commitments on Blockchains.

Yang¹

2020

Preprint

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I investigate firms' decisions to make disclosure commitments before realizations of signals in the market for initial coin offerings (ICOs). The blockchain technology allows entrepreneurs to make irreversible decisions to disclose their transaction details with investors before the transactions take place. Such decisions are coded into computer programs, known as 'smart contracts,' which become immutable once deployed on blockchains. I manually collected and analyzed the 'smart contract' code of 2085 ICO projects. I find that ICOs that make more disclosure commitments with this technology are more likely to reach fundraising goals and to deliver preliminary products, consistent with that firms' choices of information quality, e.g., auditor quality, affect their IPO prices (Titman and Trueman 1986). I also find that transaction volumes on blockchains predict ICO outcomes and that investors punish ICOs with suspicious volumes, e.g., volumes that show signs of automated trading. Collectively, these findings indicate that blockchains can function as a self-commitment device, which enhances firms' ability to convey private information to the market.  I am indebted to my dissertation committee: Jenny Li Zhang (Chair), Russell Lundholm and Ralph Winter for their extensive advice and support. For additional guidance, I thank

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“…The share of tokens allocated to the team has been identified as a negative influence on the number of ICO investors (Fahlenbrach and Frattaroli 2019). Based on an analysis of ICO whitepapers, Florysiak and Schandlbauer (2019) suggest that project teams who retain a larger share of the tokens act as market makers on secondary markets and provide liquidity. In addition, such project teams quickly sell their share of tokens after an exchange listing to quickly realize profits or even to scam investors.…”

Section: Ico Characteristicsmentioning

confidence: 99%

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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The Information Content of ICO White Papers

Cited by 28 publications

References 81 publications

Initial Coin Offerings: Financing Growth with Cryptocurrency Token Sales

Initial Coin Offerings: Financing Growth with Cryptocurrency Token Sales

Building Trust from Code: Disclosure Commitments on Blockchains.

Effects of initial coin offering characteristics on cross-listing returns

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