Abstract
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.
Original language | English |
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Article number | 103740 |
Number of pages | 19 |
Journal | Research Policy |
Volume | 48 |
Issue number | 8 |
Early online date | 2 Apr 2019 |
DOIs | |
Publication status | Published - Oct 2019 |
Keywords
- equity crowdfunding
- crowdfunding
- corporate governance
- entrepreneurial finance
- voting rights
- ownership and control