nach oben

Small Business Economics

Erschienen in:

03.01.2023

Community-level social capital and investment decisions in equity crowdfunding

verfasst von: Massimiliano Barbi, Valentina Febo, Giancarlo Giudici

Erschienen in: Small Business Economics | Ausgabe 3/2023

Einloggen

Aktivieren Sie unsere intelligente Suche, um passende Fachinhalte oder Patente zu finden.

search-config

KI-gestützte Suche

Aus

Abstract

We investigate the role of community-level social capital in individuals’ investment decisions in equity crowdfunding. We exploit a hand-collected dataset of individual investments pledged to successful campaigns in Italy between 2014 and 2018. Individuals born in provinces with high social capital invest more substantially in riskier campaigns. Contrary to inborn social capital, social capital in the province where investors live has no impact. This evidence survives several robustness checks and highlights the crucial role of an individual's cultural traits in fostering investment in equity crowdfunding.

Vorheriger Artikel SME viability in the COVID-19 recovery

Nächster Artikel Overeducation, natural amenities, and entrepreneurship

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Nur mit Berechtigung zugänglich

Unsuccessful campaigns attract a significantly smaller number of investors. There were 92 unsuccessful equity crowdfunding campaigns in Italy initiated between 2014 and 2018. We do not know who the pledgers were (or whether they were individual investors or firms), but these campaigns were supported by 11 pledges, on average, against 65 (= 12,161/188) for successful campaigns. Moreover, pledges to unsuccessful campaigns can be placed only to attract other investors and might be withdrawn strategically before the end of the campaign (Meoli and Vismara, 2021). Therefore, using pledges to unsuccessful campaigns leads to the risk of considering pledges that would never become real.

Table 14 in the appendix provides a detailed description of the proxies and how they are constructed, along with the data source.

We weight 2003 waste recycling by the share of the population in each province that was actually covered by sorted waste collection services, as in Galardo et al. (2019).

In the robustness section later in the paper, we also use each of these five variables in isolation. In spite of an expected lower statistical significance, this exercise shows that the main results of the paper continue to hold.

Figure 2 in the Appendix shows the provincial distribution for each of the five proxies.

We recognize that for some firms (e.g., newly established ventures), information on profitability might not be accessible when the campaign is launched. We discuss this matter later in the paper, and we check the robustness of our results to a more restrictive definition of Unprofitable.

The number of observations is not exactly the same in each of the two subsamples, as CSC is defined at the provincial level, and all investments made by investors born in the same province share the same level of CSC.

All results hold unchanged excluding follow-on campaigns.

We repeat our regressions in the subsample of first pledgers. All results continue to hold.

In untabulated results, we repeat the analysis in Table 7 only for a subsample of 2246 investments made by movers. The results continue to hold and are available upon request.

Aggarwal, R., Faccio, M., Guedhami, O., & Kwok, C. C. Y. (2016). Culture and finance: An introduction. Journal of Corporate Finance, 41, 466–474. https://doi.org/10.1016/j.jcorpfin.2016.09.011CrossRef

Ahlers, G. K. C., Cumming, D., Günther, C., & Schweizer, D. (2015). Signaling in equity crowdfunding. Entrepreneurship Theory and Practice, 39(4), 955–980. https://doi.org/10.1111/etap.12157CrossRef

Blaseg, D., Cumming, D., & Koetter, M. (2021). Equity crowdfunding: High-quality or low-quality entrepreneurs? Entrepreneurship: Theory and Practice, 45(3), 505–530. https://doi.org/10.1177/1042258719899427CrossRef

Block, J. H., Colombo, M. G., Cumming, D. J., & Vismara, S. (2018). New players in entrepreneurial finance and why they are there. Small Business Economics, 50, 239–250. https://doi.org/10.1007/s11187-016-9826-6CrossRef

Block, J. H., Groh, A., Hornuf, L., Vanacker, T., & Vismara, S. (2021). The entrepreneurial finance markets of the future: A comparison of crowdfunding and initial coin offerings. Small Business Economics, 57, 865–882. https://doi.org/10.1007/s11187-020-00330-2CrossRef

Bottazzi, L., Da Rin, M., & Hellmann, T. (2016). The importance of trust for investment: Evidence from venture capital. Review of Financial Studies, 29(9), 2283–2318. https://doi.org/10.1093/rfs/hhw023CrossRef

Butticè, V., Di Pietro, F., & Tenca, F. (2020). Is equity crowdfunding always good? Deal structure and the attraction of venture capital investors. Journal of Corporate Finance, 65, 1–15. https://doi.org/10.1016/j.jcorpfin.2020.101773CrossRef

Butticè, V., & Vismara, S. (2022). Inclusive digital finance: The industry of equity crowdfunding. Journal of Technology Transfer, 47, 1224–1241. https://doi.org/10.1007/s10961-021-09875-0CrossRef

Cai, W., Polzin, F., & Stam, E. (2021). Crowdfunding and social capital: A systematic review using a dynamic perspective. Technological Forecasting and Social Change, 162(2021), 1–22. https://doi.org/10.1016/j.techfore.2020.120412CrossRef

Cholakova, M., & Clarysse, B. (2015). Does the possibility to make equity investments in crowdfunding projects crowd out reward-based investments? Entrepreneurship Theory and Practice, 39(1), 145–172. https://doi.org/10.1111/etap.12139CrossRef

Colombo, M.G., Fisch, C., Momtaz, P.P., and Vismara, S. (2022). The CEO beauty premium: Founder CEO attractiveness and firm valuation in initial coin offerings, Strategic Entrepreneurship Journal. https://doi.org/10.1002/sej.1417

Colquitt, J. A., Scott, B. A., & LePine, J. A. (2007). Trust, trustworthiness, and trust propensity: a meta-analytic test of their unique relationships with risk taking and job performance. Journal of Applied Psychology, 92(4), 909. https://doi.org/10.1037/0021-9010.92.4.909CrossRef

Cumming, D., Hervé, F., Manthé, E., and Schwienbacher, A. (2020). Testing-the-waters policy with hypothetical investment: Evidence from equity crowdfunding, Entrepreneurship Theory and Practice, 1-26. https://doi.org/10.1177/1042258720932522

Cumming, D., Johan, S., & Zhang, Y. (2019a). The role of due diligence in crowdfunding platforms. Journal of Banking & Finance, 108, 105661. https://doi.org/10.1016/j.jbankfin.2019.105661CrossRef

Cumming, D., Meoli, M., & Vismara, S. (2019b). Investors’ choices between cash and voting rights: Evidence from dual-class equity crowdfunding. Research Policy, 48(8), 1–19. https://doi.org/10.1016/j.respol.2019.01.014CrossRef

Cumming, D., Meoli, M., & Vismara, S. (2021). Does equity crowdfunding democratize entrepreneurial finance? Small Business Economics, 56(2), 533–552. https://doi.org/10.1007/s11187-019-00188-zCrossRef

Degeorge, F., Patel, J., & Zeckhauser, R. (1999). Earnings management to exceed thresholds. Journal of Business, 72(1), 1–33. https://doi.org/10.1086/209601CrossRef

El-Attar, M., & Poschke, M. (2011). Trust and the choice between housing and financial assets: Evidence from Spanish households. Review of Finance, 15(4), 727–756. https://doi.org/10.1093/rof/rfq030CrossRef

Fernández, R. (2011). Does culture matter? In Handbook of Social Economics (Vol. 1, pp. 481–510). Elsevier. https://doi.org/10.1016/B978-0-444-53187-2.00011-5CrossRef

Fernández, R., & Fogli, A. (2009). Culture: An Empirical Investigation of Beliefs Work, and Fertility. American Economic Journal: Macroeconomics, 1(1), 146–177. https://doi.org/10.1257/mac.1.1.146CrossRef

Galardo, M., Lozzi, M., and Mistrulli, P.E. (2019). Credit supply, uncertainty and trust: The role of social capital, Working Paper. https://doi.org/10.32057/0.TD.2019.1245

Giraudo, E., Giudici, G., & Grilli, L. (2019). Entrepreneurship policy and the financing of young innovative companies: Evidence from the Italian Startup Act. Research Policy, 48(9), 1–18. https://doi.org/10.1016/j.respol.2019.05.010CrossRef

Giudici, G. (2015). Equity crowdfunding of an entreprenurial activity, in University Evolution, Entrepreneurial Activity and Regional Competitiveness, Springer. https://doi.org/10.1007/978-3-319-17713-7_20

Giudici, G., Guerini, M., & Rossi-Lamastra, C. (2013). Crowdfunding in Italy: State of the art and future prospects. Economia e Politica Industriale, 40(4), 173–188. https://doi.org/10.3280/POLI2013-004008CrossRef

Giudici, G., Guerini, M., & Rossi-Lamastra, C. (2018). Reward-based crowdfunding of entrepreneurial projects: The effect of local altruism and localized social capital on proponents’ success. Small Business Economics, 50(2), 307–324. https://doi.org/10.1007/s11187-016-9830-xCrossRef

Giudici, G., Guerini, M., & Rossi-Lamastra, C. (2020). Elective affinities: Exploring the matching between entrepreneurs and investors in equity crowdfunding. Baltic Journal of Management, 15(2), 183–198. https://doi.org/10.1108/BJM-08-2019-0287CrossRef

Guiso, L., Sapienza, P., & Zingales, L. (2004). The role of social capital in financial development. American Economic Review, 94(3), 526–556. https://doi.org/10.1257/0002828041464498CrossRef

Guiso, L., Sapienza, P., & Zingales, L. (2006). Does culture affect economic outcomes? Journal of Economic Perspectives, 20(2), 23–48. https://doi.org/10.1257/jep.20.2.23CrossRef

Guiso, L., Sapienza, P., & Zingales, L. (2008a). Trusting the stock market. Journal of Finance, 63(6), 2557–2600. https://doi.org/10.1111/j.1540-6261.2008.01408.xCrossRef

Guiso, L., Sapienza, P., & Zingales, L. (2008b). Social capital as good culture. Journal of the European Economic Association, 6(2–3), 295–320. https://doi.org/10.1162/JEEA.2008.6.2-3.295CrossRef

Guiso, L., Sapienza, P., and Zingales, L. (2012). Civic capital as the missing link, in Handbook of Social Economics, Elsevier. https://doi.org/10.1016/B978-0-444-53187-2.00010-3

Guiso, L., Sapienza, P., & Zingales, L. (2015). Corporate culture, societal culture, and institutions. American Economic Review, 105(5), 336–339. https://doi.org/10.1257/aer.p20151074CrossRef

Gupta, A., Raman, K., & Shang, C. (2018). Social capital and the cost of equity. Journal of Banking and Finance, 87, 102–117. https://doi.org/10.1016/j.jbankfin.2017.10.002CrossRef

Hasan, I., He, Q., & Lu, H. (2020). The impact of social capital on economic attitudes and outcomes. Journal of International Money and Finance, 108, 102162. https://doi.org/10.1016/j.jimonfin.2020.102162CrossRef

Hasan, I., He, Q. and Lu, H. (2021). Social capital, trusting, and trustworthiness: Evidence from peer-to-peer lending, Journal of Financial and Quantitative Analysis, 1-67. https://doi.org/10.1017/S0022109021000259

Hervé, F., Manthé, E., Sannajust, A., & Schwienbacher, A. (2019). Determinants of individual investment decisions in investment-based crowdfunding. Journal of Business Finance and Accounting, 46(5–6), 762–783. https://doi.org/10.1111/jbfa.12372CrossRef

Hervé, F., & Schwienbacher, A. (2018). Round-number bias in investment: Evidence from equity crowdfunding. Finance, 39(1), 71–105. https://doi.org/10.3917/fina.391.0071CrossRef

Hoi, C. K., Wu, Q., & Zhang, H. (2019). Does social capital mitigate agency problems? Evidence from Chief Executive Officer (CEO) compensation. Journal of Financial Economics, 133(2), 498–519. https://doi.org/10.1016/j.jfineco.2019.02.009CrossRef

Hong, H., Kubik, J. D., & Stein, J. C. (2004). Social interaction and stock-market participation. Journal of Finance, 59(1), 137–163. https://doi.org/10.1111/j.1540-6261.2004.00629.xCrossRef

Hornuf, L., & Schwienbacher, A. (2017). Should securities regulation promote equity crowdfunding? Small Business Economics, 49(3), 579–593. https://doi.org/10.1007/s11187-017-9839-9CrossRef

Ichino, A., & Maggi, G. (2000). Work environment and individual background: Explaining regional shirking differentials in a large Italian firm. Quarterly Journal of Economics, 115(3), 1057–1090. https://doi.org/10.1162/003355300554890CrossRef

Johan, S., & Zhang, Y. (2020). Quality revealing versus overstating in equity crowdfunding. Journal of Corporate Finance, 65(2020), 1–16. https://doi.org/10.1016/j.jcorpfin.2020.101741CrossRef

Javakhadze, D., Ferris, S. P., & French, D. W. (2016). Managerial social capital and financial development: A cross-country analysis. Financial Review, 51(1), 37–68. https://doi.org/10.1111/fire.12097CrossRef

Jha, A. (2019). Financial reports and social capital. Journal of Business Ethics, 155(2), 567–596. https://doi.org/10.1007/s10551-017-3495-5CrossRef

Laursen, K., Masciarelli, F., & Prencipe, A. (2012a). Regions matter: How localized social capital affects innovation and external knowledge acquisition. Organization Science, 23(1), 177–193. https://doi.org/10.1287/orsc.1110.0650CrossRef

Laursen, K., Masciarelli, F., & Prencipe, A. (2012). Trapped or spurred by the home region? The effects of potential social capital on involvement in foreign markets for goods and technology. Journal of International Business Studies, 43(9), 783–807. https://doi.org/10.1057/jibs.2012.27CrossRef

Lin, T. C. and Pursiainen, V. (2022). Regional Social Capital and Moral Hazard in Crowdfunding, SSRN Working paper. https://ssrn.com/abstract=3088905. Accessed 8 Dec 2022

Lins, K. V., Servaes, H., & Tamayo, A. (2017). Social capital, trust, and firm performance: The value of corporate social responsibility during the financial crisis. Journal of Finance, 72(4), 1785–1824. https://doi.org/10.1111/jofi.12505CrossRef

Lukkarinen, A., Teich, J. E., Wallenius, H., & Wallenius, J. (2016). Success drivers of online equity crowdfunding campaigns. Decision Support Systems, 8, 26–38. https://doi.org/10.1016/j.dss.2016.04.006CrossRef

Meoli, M., & Vismara, S. (2021). Information manipulation in equity crowdfunding markets. Journal of Corporate Finance, 67(1), 101866. https://doi.org/10.1016/j.jcorpfin.2020.101866CrossRef

Mistrulli, P.E. and Vacca V. (2015). Social capital and the cost of credit: Evidence from a crisis, SSRN Working Paper. https://doi.org/10.2139/ssrn.2600887

Mochkabadi, K. and Volkmann, C.K. (2020). Equity crowdfunding: A systematic review of the literature, Small Business Economics, 75-118. https://doi.org/10.1007/s11187-018-0081-x

Mohammadi, A., & Shafi, K. (2018). Gender differences in the contribution patterns of equity-crowdfunding investors. Small Business Economics, 50(2), 275–287. https://doi.org/10.1007/s11187-016-9825-7CrossRef

Polzin, F., Toxopeus, H., & E., Stam,. (2018). The wisdom of the crowd in funding: Information heterogeneity and social networks of crowdfunders. Small Business Economics, 50(2), 251–273. https://doi.org/10.1007/s11187-016-9829-3CrossRef

Putnam, R. D. (1993). Making democracy work: Civic traditions in modern Italy. Princeton University Press.

Rau, P.R. (2020). Law, trust, and the development of crowdfunding, SSRN Working Paper. https://ssrn.com/abstract=2989056. Accessed 8 Dec 2022

Rupasingha, A., Goetz, S. J., & Freshwater, D. (2006). The production of social capital in US counties. Journal of Socio-Economics, 35(1), 83–101. https://doi.org/10.1016/j.socec.2005.11.001CrossRef

Scrivens, K. and Smith C. (2013). Four interpretations of social capital: An agenda for measurement, OECD Statistics Working Paper. https://doi.org/10.1787/5jzbcx010wmt-en

Servaes, H., & Tamayo, A. (2017). The role of social capital in corporations: A review. Oxford Review of Economic Policy, 33(2), 201–220. https://doi.org/10.1093/oxrep/grx026CrossRef

Shafi, K., & Mohammadi, A. (2020). Too gloomy to invest: Weather-induced mood and crowdfunding. Journal of Corporate Finance, 65, 1–20. https://doi.org/10.1016/j.jcorpfin.2020.101761CrossRef

Signori, A., & Vismara, S. (2018). Does success bring success? The Post-Offering Lives of Equity-Crowdfunded Firms. Journal of Corporate Finance, 50, 575–591. https://doi.org/10.1016/j.jcorpfin.2017.10.018CrossRef

Tabellini, G. (2008). The scope of cooperation: Values and incentives. Quarterly Journal of Economics, 123(3), 905–950. https://doi.org/10.1162/qjec.2008.123.3.905CrossRef

Uslaner, E. M. (2008). Where you stand depends upon where your grandparents sat: The inheritability of generalized trust. Public Opinion Quarterly, 72(4), 725–740. https://doi.org/10.1093/poq/nfn058CrossRef

Vismara, S. (2016). Equity retention and social network theory in equity crowdfunding. Small Business Economics, 46(4), 579–590. https://doi.org/10.1007/s11187-016-9710-4CrossRef

Vismara, S. (2018). Information cascades among investors in equity crowdfunding. Entrepreneurship: Theory and Practice, 42(3), 467–497. https://doi.org/10.1111/etap.12261CrossRef

Vismara, S. (2022). Expanding corporate finance perspectives to equity crowdfunding. Journal of Technology Transfer, 47, 1629–1639. https://doi.org/10.1007/s10961-021-09903-zCrossRef

Wilson, K.E. and Testoni M. (2014). Improving the role of equity crowdfunding in Europe's capital markets, SSRN Working Paper. https://ssrn.com/abstract=2502280. Accessed 8 Dec 2022

Ziegler, T., Shneor, R., Wenzlaff, K., Odorovic, A., Johanson, D., Hao, R., and Ryll L. (2019). Shifting paradigms. The 4th European alternative finance benchmarking report. Cambridge. https://doi.org/10.2139/ssrn.3772260

Titel: Community-level social capital and investment decisions in equity crowdfunding
verfasst von: Massimiliano Barbi
Valentina Febo
Giancarlo Giudici
Publikationsdatum: 03.01.2023
Verlag: Springer US
Erschienen in: Small Business Economics / Ausgabe 3/2023
Print ISSN: 0921-898X
Elektronische ISSN: 1573-0913
DOI: https://doi.org/10.1007/s11187-022-00724-4

Springer Professional

Abstract

Bitte loggen Sie sich ein, um Zugang zu Ihrer Lizenz zu erhalten.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Springer Professional "Wirtschaft"

Weitere Artikel der Ausgabe 3/2023

A ‘deviant men’ theory of business expectations in nascent entrepreneurs

Responding to unexpected crises: The roles of slack resources and entrepreneurial attitude to build resilience

Correction to: The Three-Case Argument against the Moral Justificatory Significance of Basic Desert

Empowering female entrepreneurs through university affiliation: evidence from Italian academic spinoffs

Initial Coin Offerings: a Hybrid Empirical Review

Explaining academic entrepreneurial motivation in China: the role of regional policy, organizational support, and individual characteristics

Premium Partner