Exploring the Impact of Initial Herd on Overfunding in Equity Crowdfunding

Yijing Li; Albert Fei Liu; Wenjie Fan; Eric T.K. Lim; Yong Liu

doi:10.1016/j.im.2020.103269

Exploring the Impact of Initial Herd on Overfunding in Equity Crowdfunding

Yijing Li, Albert Fei Liu, Wenjie Fan^*, Eric T.K. Lim, Yong Liu

^*Corresponding author for this work

Department of Digitalization

Research output: Contribution to journal › Journal article › Research › peer-review

Abstract

Outcome of equity crowdfunding campaigns often exceeds original fundraising goals, leading to market inefficiency. This undesirable phenomenon of overfunding garnered little attention in past studies. Synthesizing extant literature on crowdfunding and herding, we identified the initial herd made visible by funding progress indicator as the main cause of overfunding. The impact of the initial herd can be quantified by three dimensions: maturity, intensity, and persistency. We then advance and validate a research model for examining how dimensions of the initial herd affect overfunding in equity crowdfunding. Findings from this study can shed light on plausible remedies for the overfunding issue.

Original language	English
Article number	103269
Journal	Information & Management
Volume	59
Issue number	3
Number of pages	10
ISSN	0378-7206
DOIs	https://doi.org/10.1016/j.im.2020.103269
Publication status	Published - Apr 2022

Bibliographical note

Published online: 15 January 2020.

Keywords

Crowdfunding
Herd
Herding behavior
Overfunding

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Cite this

@article{cc14c375e093481e8d8652cfe7ac1920,

title = "Exploring the Impact of Initial Herd on Overfunding in Equity Crowdfunding",

abstract = "Outcome of equity crowdfunding campaigns often exceeds original fundraising goals, leading to market inefficiency. This undesirable phenomenon of overfunding garnered little attention in past studies. Synthesizing extant literature on crowdfunding and herding, we identified the initial herd made visible by funding progress indicator as the main cause of overfunding. The impact of the initial herd can be quantified by three dimensions: maturity, intensity, and persistency. We then advance and validate a research model for examining how dimensions of the initial herd affect overfunding in equity crowdfunding. Findings from this study can shed light on plausible remedies for the overfunding issue.",

keywords = "Crowdfunding, Herd, Herding behavior, Overfunding, Crowdfunding, Herd, Herding behavior, Overfunding",

author = "Yijing Li and Liu, {Albert Fei} and Wenjie Fan and Lim, {Eric T.K.} and Yong Liu",

note = "Published online: 15 January 2020.",

year = "2022",

month = apr,

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language = "English",

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TY - JOUR

T1 - Exploring the Impact of Initial Herd on Overfunding in Equity Crowdfunding

AU - Li, Yijing

AU - Liu, Albert Fei

AU - Fan, Wenjie

AU - Lim, Eric T.K.

AU - Liu, Yong

N1 - Published online: 15 January 2020.

PY - 2022/4

Y1 - 2022/4

N2 - Outcome of equity crowdfunding campaigns often exceeds original fundraising goals, leading to market inefficiency. This undesirable phenomenon of overfunding garnered little attention in past studies. Synthesizing extant literature on crowdfunding and herding, we identified the initial herd made visible by funding progress indicator as the main cause of overfunding. The impact of the initial herd can be quantified by three dimensions: maturity, intensity, and persistency. We then advance and validate a research model for examining how dimensions of the initial herd affect overfunding in equity crowdfunding. Findings from this study can shed light on plausible remedies for the overfunding issue.

AB - Outcome of equity crowdfunding campaigns often exceeds original fundraising goals, leading to market inefficiency. This undesirable phenomenon of overfunding garnered little attention in past studies. Synthesizing extant literature on crowdfunding and herding, we identified the initial herd made visible by funding progress indicator as the main cause of overfunding. The impact of the initial herd can be quantified by three dimensions: maturity, intensity, and persistency. We then advance and validate a research model for examining how dimensions of the initial herd affect overfunding in equity crowdfunding. Findings from this study can shed light on plausible remedies for the overfunding issue.

KW - Crowdfunding

KW - Herd

KW - Herding behavior

KW - Overfunding

KW - Crowdfunding

KW - Herd

KW - Herding behavior

KW - Overfunding

U2 - 10.1016/j.im.2020.103269

DO - 10.1016/j.im.2020.103269

M3 - Journal article

SN - 0378-7206

VL - 59

JO - Information & Management

JF - Information & Management

IS - 3

M1 - 103269

ER -