Equity crowdfunding across borders: a conjoint experiment

Abstract

Purpose The purpose of this paper is to identify and disentangle the home bias in equity crowdfunding to better understand irrational decision making of investors. Design/methodology/approach A first choice-based conjoint (CBC) experiment with 217 participants was conducted in central Europe in order to single out different factors contributing to an apparent home bias of capital providers. Findings The authors find that investors show an avoidance of foreign currency, while payment methods seem to have no considerable influence on the decision making. Furthermore, participants significantly decided against national legislation in favor for EU legislation. Research limitations/implications This study predominantly helps to gain deeper insights into influencing factors in crowdfunding markets with a special concern on a cross-border context. For capital-seeking companies, the home bias of potential investor has to be taken into account, when designing a crowdfunding campaign. For legislators, the apparent influence of the legal framework should serve as a wake-up call to consolidate the regulation of crowdfunding in the EU. Originality/value This is the first CBC experiment application in a cross-border crowdfunding context. It provides deeper understanding of the importance of geographical proximity between crowdfunding projects and investors and calls for further research to examine how such an effect could be diminished.

Success drivers of online equity crowdfunding campaigns

“…As this unclarity may be related to the investor-level heterogeneity of investment motivations in equity crowdfunding (Niemand et al, 2018), it calls for research settings that would allow for this granularity.…”

Does a Local Bias Exist in Equity Crowdfunding?

“…In their recent study, Niemand, Angerer, Thies, Kraus, and Hebenstreit (2018) run a choicebased conjoint experiment analyzing factors contributing to a home bias in equity crowdfunding. They find that investors in central Europe avoid foreign currencies and decide against national legislation in favor for EU legislation.…”

More is not always better—non-linear effects in crowdfunding

“…2 École Supérieure du Commerce Extérieur, Paris, France. 3 University of Liechtenstein, Vaduz, Liechtenstein. 4 University of Valencia, Valencia, Spain.…”

“…Crowdfunding research investigates the principles and interactions of donors, backers, or investors, often equated as the "crowd," with projects initiators, entrepreneurs, artists, or any individual or organization seeking financial support via platforms [1][2][3]. Following established definitions of crowdfunding, we hereafter term these backers, projects, and platforms [4,5].…”