Title: Investors decision-making in equity crowdfunding

Authors: Allouche Nabila; Bouri Abdelfettah

Addresses: Faculty of Economics and Management of Sfax, Airport Road Km 4, Sfax, 3018, Tunisia ' Faculty of Economics and Management of Sfax, Airport Road Km 4, Sfax, 3018, Tunisia

Abstract: Equity crowdfunding is a way to finance new businesses. Given that the means of communication are limited, this study relies on signalling theory to examine the signals that may influence the decision of investors to invest in equity financing through crowdfunding platforms. This study used a sample of 320 projects listed on crowdcube between April 2017 and December 2018 regarding equity crowdfunding campaigns in the UK. The relationship between each type of signal and the level of success of equity crowdfunding has been tested empirically using binary logistic regression, ordinary least squares regression analysis, and negative binomial regression. The results of our research show that higher retention of equity shares by entrepreneurs, board experience and/or education and the information about the company's strategy to distribute dividends have a positive impact on the success of the financing of a project. In addition, financial forecasts and rewards contribute to a higher probability of success. In contrast, exit strategy, social media, and the duration of the company have little or no impact on funding success.

Keywords: equity based crowdfunding; signaling mechanism; entrepreneurial finance; information asymmetry; crowdfunding platform.

DOI: 10.1504/IJEBR.2023.134858

International Journal of Economics and Business Research, 2023 Vol.26 No.4, pp.574 - 593

Received: 08 Mar 2021
Accepted: 21 Jul 2021
Published online: 15 Nov 2023 *

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