Investors' choices between cash and voting rights: evidence from dual-class equity crowdfunding
Research output: Contribution to journal › Article › peer-review
- University of Bergamo
This paper examines for the first time dual-class equity crowdfunding as a digital ownership model. Unique to this context, companies can set an investment threshold under which no voting rights are granted, making the issuance of Class A vs. Class B shares, depending on individual investors. Using a sample of 491 offerings on the UK platform Crowdcube from 2011 to 2015, we find that a higher separation between ownership and control rights lowers the probability of success of the offering, the likelihood of attracting professional investors, as well as the long-run prospects. Different from small investors, professional investors care about the implementation of a threshold for the attribution of voting rights and often bid the Class A threshold exactly. Family businesses, although less attractive to small investors, are relatively safer investments, because of their lower chances of failure.
|Number of pages||19|
|Early online date||2 Apr 2019|
|Publication status||Published - Oct 2019|
- equity crowdfunding, crowdfunding, corporate governance, entrepreneurial finance, voting rights, ownership and control