Browsing by Autor "Nir Vulkan"

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    Herding in equity crowdfunding
    (Wiley, 2024) Thomas B. Åstebro; Manuel Fernández Sierra; Stefano Lovo; Nir Vulkan
    Abstract We build a model of equity crowdfunding that incorporates the two major funding models: all‐or‐nothing (AoN) and keep‐it‐all (KIA). Both informed and uninformed investors arrive sequentially and rationally choose whether and how much to invest. The KIA solution turns out to be a reduced version of AoN without signalling. We test predictions using data from a leading European equity crowdfunding platform and find support. Results are consistent with rational information aggregation. However, negative information cascades may still appear. The AoN crowdfunding mechanism might therefore fail to finance a nonnegligible percentage of positive NPV projects.