Blockchain, DLT, and Fintech

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Paper Number

1413

Paper Type

short

Description

The emergence of blockchain technology has enabled the development of initial coin offerings (ICOs), an unprecedented funding model that disrupts established business models, but involves high information asymmetries. Recent studies find that the voluntary disclosure of costless information during an ICO represents a signal of higher venture quality. Yet, ventures may also disclose signals that might indicate a lack of strategic focus if not set in the proper context. For instance, by means of the issued utility tokens, ventures acquire initial customers and create brand awareness, which raises the question why additional marketing investments should be signaled. We find that while isolated pre-ICO signals on higher planned marketing investments relate negatively to post-ICO venture performance, signal consistency has the potential to reverse this effect.

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Dec 12th, 12:00 AM

Signals for Venture Performance After Initial Coin Offerings: the Role of Proceeds Allocation to Marketing and Market Orientation

The emergence of blockchain technology has enabled the development of initial coin offerings (ICOs), an unprecedented funding model that disrupts established business models, but involves high information asymmetries. Recent studies find that the voluntary disclosure of costless information during an ICO represents a signal of higher venture quality. Yet, ventures may also disclose signals that might indicate a lack of strategic focus if not set in the proper context. For instance, by means of the issued utility tokens, ventures acquire initial customers and create brand awareness, which raises the question why additional marketing investments should be signaled. We find that while isolated pre-ICO signals on higher planned marketing investments relate negatively to post-ICO venture performance, signal consistency has the potential to reverse this effect.

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