Experts or charlatans? ICO analysts and white paper informativeness

David Florysiak*, Alexander Schandlbauer


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White papers are likely the primary source of information provided to potential Initial Coin Offering (ICO) investors in platform-based ventures that may reduce information asymmetry between ICO issuers and investors. We use textual analysis to measure the information content of white paper documents. We examine how an informative white paper content signal and a concurrent potentially biased expert rating signal correlate with measures of ICO funding success, ICO underpricing, and post-ICO performance. Our empirical results suggest that high-quality ICO issuers signal their type by providing more informative white paper content, i.e., excess or new textual information not contained in recent and peer white papers. However, investors rely on the expert ratings signal in their decision to buy tokens that “jams” the white paper informative content signal. Once listed tokens receive a market valuation, white paper informative content is positively associated with our measures for underpricing, returns, and liquidity, while the expert ratings signal is rendered irrelevant.

TidsskriftJournal of Banking and Finance
StatusUdgivet - jun. 2022

Bibliografisk note

Funding Information:
? We thank Hugo Benedetti, Ralf Elsas, Ioannis Floros, Bjarne Astrup Jensen, Evgeny Lyandres, Daniel Metzger, Steffen Meyer, Thiago de Oliveira Souza and Armin Schwienbacher for helpful comments, as well as seminar participants at University of Wisconsin-Milwaukee, University of Hamburg, University of Munich Skiing Seminar, Fourth SDU Finance Workshop, 2019 Swiss Finance Annual Meeting, 2019 Midwest Finance Association Annual Meeting, Second Toronto FinTech Conference, European Financial Management Annual Meeting 2019, German Finance Association Annual Meeting 2019, Financial Management Association Annual Meeting 2019, Seventh Crowdinvesting Symposium Berlin, Australasian Finance and Banking Conference 2019. We also thank two anonymous referees for many insightful comments and suggestions and Andreas Kusk for excellent research assistance. A previous version of this paper was titled ?The Information Content of ICO White Papers?.


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