Change search
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf
Wisdom of the Crowds in a Market of Lemons: An Evaluation of the Financial Information Quality in Equity Crowdfunding
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Business Administration.
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Business Administration.
2018 (English)Independent thesis Advanced level (degree of Master (Two Years)), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

Online equity crowdfunding is a way for entrepreneurs to raise capital that has exploded in popularity in recent years. Information asymmetry and poor investor protection are threats for the long-term legitimacy of equity crowdfunding. In this study we examine the quality of the financial information shared on the crowdfunding platforms, since it is what investors have to rely on when making investment decisions. We evaluate the financial information both quantitatively and qualitatively to assess the quality in terms of accuracy and adequacy. More specifically we examine the financial forecasts primarily with quantitative methods and valuation primarily with qualitative. In total, we examine 22 companies on the Swedish equity crowdfunding platform FundedByMe. The financial forecasts are compared with the outcome from the income statements to find out if they are systematically biased. The results show that the financial forecasts are systematically overestimated. Based on previous research we have suggested two explanations for the overestimations; either overconfidence bias and/or strategic behavior. We also find the information regarding assumptions and methods used in the valuation to be inadequate. We perceive that investors needs higher quality financial information in terms of accuracy and adequacy to make well-formed investment decisions. Our recommendations are therefore to regulate equity crowdfunding further and impose higher demands on information quality. Otherwise equity crowdfunding will possibly end up as a market of “lemons”.

Place, publisher, year, edition, pages
2018. , p. 76
Keywords [en]
Crowdfunding, information asymmetry, overconfidence bias, strategic behavior
National Category
Business Administration
Identifiers
URN: urn:nbn:se:umu:diva-149308OAI: oai:DiVA.org:umu-149308DiVA, id: diva2:1220807
Supervisors
Examiners
Available from: 2018-06-19 Created: 2018-06-19 Last updated: 2018-06-19Bibliographically approved

Open Access in DiVA

fulltext(776 kB)11 downloads
File information
File name FULLTEXT01.pdfFile size 776 kBChecksum SHA-512
3934ae249291d8ed0741bb43ee99058f84959918f74032e9a3d97b049cc09ec4d17bc3f51ee8a4b9973202cfa3119490ffc53c7d18e0a246e5568417afa98fca
Type fulltextMimetype application/pdf

By organisation
Business Administration
Business Administration

Search outside of DiVA

GoogleGoogle Scholar
Total: 11 downloads
The number of downloads is the sum of all downloads of full texts. It may include eg previous versions that are now no longer available

urn-nbn

Altmetric score

urn-nbn
Total: 50 hits
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf