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Conference Paper: Fund What You Trust? Social Capital and Moral Hazard in Crowdfunding
Title | Fund What You Trust? Social Capital and Moral Hazard in Crowdfunding |
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Authors | |
Issue Date | 2018 |
Publisher | Financial Management Association. |
Citation | 2018 Financial Management Association Asia/Pacific Conference, Hong Kong, 16-18 May 2018 How to Cite? |
Abstract | We study whether social capital mitigates moral hazard in crowdfunding. We construct a yearly index of social capital for all U.S. counties and combine it with a near-comprehensive sample of Kickstarter campaigns. Our results show a strong positive correlation between the social capital of the entrepreneur’s home county and the campaign performance. For identification, we exploit a quasi-experiment based on a Kickstarter rule change that helps reduce the magnitude of moral hazard. We find that this rule change is associated with a significant reduction in the effect of social capital
on campaign outcomes. In addition, the results are stronger for campaigns that are more vulnerable to moral hazard – as proxied by entrepreneur, regional, and campaign characteristics – and in times of high economic uncertainty and low sentiment. Overall, our findings suggest that crowdfunding campaigns benefit from social capital via the alleviation of moral hazard concerns.
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Description | Session 16: Elevator Pitch: Behavioral Finance |
Persistent Identifier | http://hdl.handle.net/10722/278786 |
DC Field | Value | Language |
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dc.contributor.author | Lin, TC | - |
dc.contributor.author | Pursiainen, VP | - |
dc.date.accessioned | 2019-10-21T02:14:01Z | - |
dc.date.available | 2019-10-21T02:14:01Z | - |
dc.date.issued | 2018 | - |
dc.identifier.citation | 2018 Financial Management Association Asia/Pacific Conference, Hong Kong, 16-18 May 2018 | - |
dc.identifier.uri | http://hdl.handle.net/10722/278786 | - |
dc.description | Session 16: Elevator Pitch: Behavioral Finance | - |
dc.description.abstract | We study whether social capital mitigates moral hazard in crowdfunding. We construct a yearly index of social capital for all U.S. counties and combine it with a near-comprehensive sample of Kickstarter campaigns. Our results show a strong positive correlation between the social capital of the entrepreneur’s home county and the campaign performance. For identification, we exploit a quasi-experiment based on a Kickstarter rule change that helps reduce the magnitude of moral hazard. We find that this rule change is associated with a significant reduction in the effect of social capital on campaign outcomes. In addition, the results are stronger for campaigns that are more vulnerable to moral hazard – as proxied by entrepreneur, regional, and campaign characteristics – and in times of high economic uncertainty and low sentiment. Overall, our findings suggest that crowdfunding campaigns benefit from social capital via the alleviation of moral hazard concerns. | - |
dc.language | eng | - |
dc.publisher | Financial Management Association. | - |
dc.relation.ispartof | 2018 Financial Management Association Asia/Pacific Conference | - |
dc.title | Fund What You Trust? Social Capital and Moral Hazard in Crowdfunding | - |
dc.type | Conference_Paper | - |
dc.identifier.email | Lin, TC: chunlin@hku.hk | - |
dc.identifier.authority | Lin, TC=rp01077 | - |
dc.identifier.hkuros | 307551 | - |