Abstract

This dissertation aims to shed light on dynamics of new forms of entrepreneurial finance, in general, and crowdfunding, in particular, from three different following aspects.

First, we conduct an exhaustive search of all media reports on Kickstarter campaign fraud allegations from 2010 through 2015, and determine campaign features that are associated with a higher probability of observing fraud, using multiple matched samples of non-fraudulent campaigns. We also document the short-term negative consequence of possible breaches of trust in the market, using a sample of more than 270,000 crowdfunding campaigns posted from 2010 through 2018 on Kickstarter. Our results show that crowdfunding projects launched around a significant misconduct detection on Kickstarter tend to have a lower probability of success, raise less funds, and attract fewer backers.

Second, using a sample of 230,255 crowdfunding campaigns (2013-2018) on Kickstarter and drawing upon previous empirical evidence, the statistically significant effect of five variables on campaign success is documented. To date, numerous studies have focused on determining factors affecting crowdfunding success, however, it is extremely difficult to compare results across papers as each use incompatible specifications, and different control variables. The identified variables aim to measure the intensity of competition, creator’s crowdfunding experience, project quality & creator confidence, portal recognition, and project size. Furthermore, the effect of campaign creator’s citizenship, as well as project location, on funding success is investigated.

Third, and drawing upon previous findings on the effect of biological factors on investment behavior and entrepreneurship, a significant positive relationship between fWHR (facial Width-to-Height Ratio) of the hedge fund managers in the sample (1994-2016) and fund’s risk is documented. The association between facial masculinity of male entrepreneurs and their fund-raising outcome is also investigated using a sample of ABC channel’s “Shark Tank” show (2009-2014). The results are in line with previous findings on the positive correlation between fWHR and testosterone; a hormone which its role in describing behavioral patterns such as competitiveness and risk-taking is well-established. The study sheds light on the factors that are not incorporated in economic models, but may significantly affect financial risk-taking and performance, as well as entrepreneurial outcomes.