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Project certification and screening in the reward-based crowdfunding market

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  • Yu, Jie
  • Xiao, Shengsheng

Abstract

To alleviate the information asymmetry between fundraisers and backers, many crowdfunding platforms have launched quality certifications to help backers identify high-quality projects. Leveraging fine-grained data from Indiegogo, a well-known reward-based crowdfunding platform, we track the performance of crowdfunding projects before and after the fundraising periods and seek to understand the role of project certification in crowdfunding performance and project quality screening. Our key findings show that (1) certification has a positive effect on projects’ funding performance, both in the amount of pledged money (as a percentage of funding goal) and the probability of reaching the funding goals. (2) The certification authority could successfully screen out high-quality projects, which means that project certification is an efficient design in the two-sided crowdfunding market. Our study provides insights on project certification design in the online crowdfunding market and offers implications for fundraisers and platform managers.

Suggested Citation

  • Yu, Jie & Xiao, Shengsheng, 2023. "Project certification and screening in the reward-based crowdfunding market," Journal of Business Research, Elsevier, vol. 165(C).
    • Handle: RePEc:eee:jbrese:v:165:y:2023:i:c:s0148296323003624
    DOI: 10.1016/j.jbusres.2023.114004
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