Work

Initial coin offerings, information disclosure, and fraud

Year: 2021

Type: article

Abstract: We study the extent of fraud in initial coin offerings (ICOs), and whether information disclosure prior to the issuance predicts fraud. We document different types of fraud, and that fraudulent ICOs are on average much larger than the sample average. Issuers who disclose their code on GitHub are more likely to be targeted by phishing and hacker activities, which suggests that there are risks related to disclosing the code. Generally, we find it extremely difficult to predict fraud with the information available at the time of issuance. This calls for the need to install a third party that certifies the quality of the issuers, such as specialized platforms, or the engagement of institutional investors and venture capital funds that can perform a due diligence and thus verify the quality of the project.

Source: Small Business Economics

DOI: 10.1007/s11187-021-00471-y

Authors: Lars Hornuf, Theresa Kück, Armin Schwienbacher

Institutions: Ifo Institute for Economic Research, University of Bremen, Max Planck Institute for Innovation and Competition, SKEMA Business School, Université Côte d'Azur

Language: English

Topic: FinTech, Crowdfunding, Digital Finance

Subfield: Management Information Systems

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $2,780

Funders: University of Birmingham, Universiteit Utrecht, Universität Bremen