IDEAS home Printed from https://ideas.repec.org/a/eee/tefoso/v152y2020ics0040162519306547.html
   My bibliography  Save this article

Digital social capital and performance of initial coin offerings

Author

Listed:
  • Perez, Charles
  • Sokolova, Karina
  • Konate, Malick

Abstract

The Initial Coin Offering (ICO) has emerged as an original way for companies to leverage funding. In this study, we analyze 537 companies that chose the ICO model in 2017 and investigate how their digital social capital is related to the rank of the ICO based on the market capitalization. The goal of this work is to better understand the role of digital social capital in ICO success. Multiple facets of digital presence are analyzed, such as website, ICO activity on social networks like Twitter, the community built and the activeness of the community. We apply an exploratory factor analysis to leverage the main factors that can be used as latent variables, and build an original research model. Structural equation modelling is used for model evaluation and hypothesis testing. Curvilinear analyses allow us to obtain a finer vision of our results. We also verify the robustness of our results in predicting the ICO rank further in time. Our results suggest that social capital is indicative of the ICO performance. The website audience is found to be the most predictive. However, the audience and the centrality of an ICO in the community seems less important than the activeness of an ICO and of the related community on social networks.

Suggested Citation

  • Perez, Charles & Sokolova, Karina & Konate, Malick, 2020. "Digital social capital and performance of initial coin offerings," Technological Forecasting and Social Change, Elsevier, vol. 152(C).
    • Handle: RePEc:eee:tefoso:v:152:y:2020:i:c:s0040162519306547
    DOI: 10.1016/j.techfore.2019.119888
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0040162519306547
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.techfore.2019.119888?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. David Garcia & Claudio Juan Tessone & Pavlin Mavrodiev & Nicolas Perony, 2014. "The digital traces of bubbles: feedback cycles between socio-economic signals in the Bitcoin economy," Papers 1408.1494, arXiv.org.
    2. Allison, Thomas H. & Davis, Blakley C. & Webb, Justin W. & Short, Jeremy C., 2017. "Persuasion in crowdfunding: An elaboration likelihood model of crowdfunding performance," Journal of Business Venturing, Elsevier, vol. 32(6), pages 707-725.
    3. Massimo G. Colombo & Chiara Franzoni & Cristina Rossi–Lamastra, 2015. "Internal Social Capital and the Attraction of Early Contributions in Crowdfunding," Entrepreneurship Theory and Practice, , vol. 39(1), pages 75-100, January.
    4. Wessel, Michael & Thies, Ferdinand & Benlian, Alexander, 2016. "The Emergence and Effects of Fake Social Information: Evidence from Crowdfunding," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 82421, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    5. Wessel, Michael & Thies, Ferdinand & Benlian, Alexander, 2016. "The Emergence and Effects of Fake Social Information: Evidence from Crowdfunding," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 83005, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    6. Mollick, Ethan, 2014. "The dynamics of crowdfunding: An exploratory study," Journal of Business Venturing, Elsevier, vol. 29(1), pages 1-16.
    7. David Garcia & Claudio Tessone & Pavlin Mavrodiev & Nicolas Perony, "undated". "The digital traces of bubbles: feedback cycles between socio-economic signals in the Bitcoin economy," Working Papers ETH-RC-14-001, ETH Zurich, Chair of Systems Design.
    8. Ranjay Gulati & Maxim Sytch & Adam Tatarynowicz, 2012. "The Rise and Fall of Small Worlds: Exploring the Dynamics of Social Structure," Organization Science, INFORMS, vol. 23(2), pages 449-471, April.
    9. Chen, Yan, 2018. "Blockchain tokens and the potential democratization of entrepreneurship and innovation," Business Horizons, Elsevier, vol. 61(4), pages 567-575.
    10. Mingfeng Lin & Nagpurnanand R. Prabhala & Siva Viswanathan, 2013. "Judging Borrowers by the Company They Keep: Friendship Networks and Information Asymmetry in Online Peer-to-Peer Lending," Management Science, INFORMS, vol. 59(1), pages 17-35, August.
    11. Adhami, Saman & Giudici, Giancarlo & Martinazzi, Stefano, 2018. "Why do businesses go crypto? An empirical analysis of initial coin offerings," Journal of Economics and Business, Elsevier, vol. 100(C), pages 64-75.
    12. Young Bin Kim & Jun Gi Kim & Wook Kim & Jae Ho Im & Tae Hyeong Kim & Shin Jin Kang & Chang Hun Kim, 2016. "Predicting Fluctuations in Cryptocurrency Transactions Based on User Comments and Replies," PLOS ONE, Public Library of Science, vol. 11(8), pages 1-17, August.
    13. Fisch, Christian, 2019. "Initial coin offerings (ICOs) to finance new ventures," Journal of Business Venturing, Elsevier, vol. 34(1), pages 1-22.
    14. Thies, Ferdinand & Wessel, Michael & Benlian, Alexander, 2014. "Understanding the Dynamic Interplay of Social Buzz and Contribution Behavior within and between Online Platforms – Evidence from Crowdfunding," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 66131, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    15. D'aniel Kondor & M'arton P'osfai & Istv'an Csabai & G'abor Vattay, 2013. "Do the rich get richer? An empirical analysis of the BitCoin transaction network," Papers 1308.3892, arXiv.org, revised Mar 2014.
    16. Lee, Yoon-Joo & Yoon, Hye Jin & O'Donnell, Nicole H., 2018. "The effects of information cues on perceived legitimacy of companies that promote corporate social responsibility initiatives on social networking sites," Journal of Business Research, Elsevier, vol. 83(C), pages 202-214.
    17. Paola Cerchiello & Anca Mirela Toma, 2018. "ICOs success drivers: a textual and statistical analysis," DEM Working Papers Series 164, University of Pavia, Department of Economics and Management.
    18. Nofer, Michael & Hinz, Oliver, 2015. "Using Twitter to Predict the Stock Market: Where is the Mood Effect?," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 77140, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    19. Ajay K. Agrawal & Christian Catalini & Avi Goldfarb, 2011. "The Geography of Crowdfunding," NBER Working Papers 16820, National Bureau of Economic Research, Inc.
    20. Dániel Kondor & Márton Pósfai & István Csabai & Gábor Vattay, 2014. "Do the Rich Get Richer? An Empirical Analysis of the Bitcoin Transaction Network," PLOS ONE, Public Library of Science, vol. 9(2), pages 1-10, February.
    21. Michael Nofer & Oliver Hinz, 2015. "Using Twitter to Predict the Stock Market," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 57(4), pages 229-242, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Akyildirim, Erdinç & Corbet, Shaen & Cumming, Douglas & Lucey, Brian & Sensoy, Ahmet, 2020. "Riding the Wave of Crypto-Exuberance: The Potential Misusage of Corporate Blockchain Announcements," Technological Forecasting and Social Change, Elsevier, vol. 159(C).
    2. José Campino & Ana Brochado & Álvaro Rosa, 2022. "Initial coin offerings (ICOs): Why do they succeed?," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-35, December.
    3. Nguyen, Phong Thanh & Nguyen, Linh Thi My, 2022. "Understanding platform market value through decentralization governance — An integrative model from signaling and mechanism design theory," Technological Forecasting and Social Change, Elsevier, vol. 183(C).
    4. Meoli, Michele & Vismara, Silvio, 2022. "Machine-learning forecasting of successful ICOs," Journal of Economics and Business, Elsevier, vol. 121(C).
    5. Fredström, Ashkan & Parida, Vinit & Wincent, Joakim & Sjödin, David & Oghazi, Pejvak, 2022. "What is the Market Value of Artificial Intelligence and Machine Learning? The Role of Innovativeness and Collaboration for Performance," Technological Forecasting and Social Change, Elsevier, vol. 180(C).
    6. Giudici, Giancarlo & Giuffra Moncayo, Giancarlo & Martinazzi, Stefano, 2020. "The role of advisors’ centrality in the success of Initial Coin Offerings," Journal of Economics and Business, Elsevier, vol. 112(C).
    7. Eloy Gil-Cordero & Juan Pedro Cabrera-Sánchez & Manuel Jesús Arrás-Cortés, 2020. "Cryptocurrencies as a Financial Tool: Acceptance Factors," Mathematics, MDPI, vol. 8(11), pages 1-16, November.
    8. Ma, Yechi & Ahmad, Ferhana & Liu, Miao & Wang, Zilong, 2020. "Portfolio optimization in the era of digital financialization using cryptocurrencies," Technological Forecasting and Social Change, Elsevier, vol. 161(C).
    9. Marten Risius & Christoph F. Breidbach & Mathieu Chanson & Ruben Krannichfeldt & Felix Wortmann, 2023. "On the performance of blockchain-based token offerings," Electronic Markets, Springer;IIM University of St. Gallen, vol. 33(1), pages 1-19, December.
    10. Bollaert, Helen & Lopez-de-Silanes, Florencio & Schwienbacher, Armin, 2021. "Fintech and access to finance," Journal of Corporate Finance, Elsevier, vol. 68(C).
    11. Halyna Mishchuk & Jana Štofková & Vita Krol & Olena Joshi & László Vasa, 2022. "Social Capital Factors Fostering the Sustainable Competitiveness of Enterprises," Sustainability, MDPI, vol. 14(19), pages 1-19, September.
    12. Chitsazan, Hasti & Bagheri, Afsaneh & Tajeddin, Mahdi, 2022. "Initial coin offerings (ICOs) success: Conceptualization, theories and systematic analysis of empirical studies," Technological Forecasting and Social Change, Elsevier, vol. 180(C).
    13. Boukis, Achilleas, 2023. "Storytelling in initial coin offerings: Attracting investment or gaining referrals?," Journal of Business Research, Elsevier, vol. 160(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ferdinand Thies & Sören Wallbach & Michael Wessel & Markus Besler & Alexander Benlian, 2022. "Initial coin offerings and the cryptocurrency hype - the moderating role of exogenous and endogenous signals," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(3), pages 1691-1705, September.
    2. Rob Gleasure & Kieran Conboy & Lorraine Morgan, 2019. "Talking Up a Storm: How Backers Use Public Discourse to Exert Control in Crowdfunded Systems Development Projects," Information Systems Research, INFORMS, vol. 30(2), pages 447-465, June.
    3. Flori, Andrea, 2019. "News and subjective beliefs: A Bayesian approach to Bitcoin investments," Research in International Business and Finance, Elsevier, vol. 50(C), pages 336-356.
    4. Mingchun Chen & Zhiying Liu & Chaoliang Ma & Xiuyuan Gong, 2021. "A distinctive early bird price in reward-based crowdfunding," Electronic Commerce Research, Springer, vol. 21(2), pages 347-370, June.
    5. Yue Chen & Wentao Zhang & Xiangbin Yan & Jiahua Jin, 2020. "The life-cycle influence mechanism of the determinants of financing performance: an empirical study of a Chinese crowdfunding platform," Review of Managerial Science, Springer, vol. 14(1), pages 287-309, February.
    6. Li, Mu-Yao & Cai, Qing & Gu, Gao-Feng & Zhou, Wei-Xing, 2019. "Exponentially decayed double power-law distribution of Bitcoin trade sizes," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 535(C).
    7. Andrea Flori, 2019. "Cryptocurrencies In Finance: Review And Applications," International Journal of Theoretical and Applied Finance (IJTAF), World Scientific Publishing Co. Pte. Ltd., vol. 22(05), pages 1-22, August.
    8. Rotem Shneor & Urszula Mrzygłód & Joanna Adamska-Mieruszewska & Anna Fornalska-Skurczyńska, 2022. "The role of social trust in reward crowdfunding campaigns’ design and success," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(3), pages 1103-1118, September.
    9. Lihuan Guo & Wei Wang & Yenchun Jim Wu & Mark Goh, 2021. "How much do social connections matter in fundraising outcomes?," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 7(1), pages 1-23, December.
    10. Silvia Bartolucci & Fabio Caccioli & Pierpaolo Vivo, 2019. "A percolation model for the emergence of the Bitcoin Lightning Network," Papers 1912.03556, arXiv.org.
    11. Christian Hackober & Carolin Bock, 2021. "Which investors’ characteristics are beneficial for initial coin offerings? Evidence from blockchain technology-based firms," Journal of Business Economics, Springer, vol. 91(8), pages 1085-1124, October.
    12. Andreas Hoegen & Dennis M. Steininger & Daniel Veit, 2018. "How do investors decide? An interdisciplinary review of decision-making in crowdfunding," Electronic Markets, Springer;IIM University of St. Gallen, vol. 28(3), pages 339-365, August.
    13. Cuixia Jiang & Ranran Han & Qifa Xu, 2023. "The impact of social media input intensity on reward-based crowdfunding performance: evidence from China," Electronic Commerce Research, Springer, vol. 23(3), pages 1753-1774, September.
    14. Alexandre Bovet & Carlo Campajola & Jorge F. Lazo & Francesco Mottes & Iacopo Pozzana & Valerio Restocchi & Pietro Saggese & Nicol'o Vallarano & Tiziano Squartini & Claudio J. Tessone, 2018. "Network-based indicators of Bitcoin bubbles," Papers 1805.04460, arXiv.org.
    15. Ladislav Kristoufek, 2015. "What Are the Main Drivers of the Bitcoin Price? Evidence from Wavelet Coherence Analysis," PLOS ONE, Public Library of Science, vol. 10(4), pages 1-15, April.
    16. Kristoufek, Ladislav, 2018. "On Bitcoin markets (in)efficiency and its evolution," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 503(C), pages 257-262.
    17. Giudici, Giancarlo & Giuffra Moncayo, Giancarlo & Martinazzi, Stefano, 2020. "The role of advisors’ centrality in the success of Initial Coin Offerings," Journal of Economics and Business, Elsevier, vol. 112(C).
    18. Chan, C.S. Richard & Parhankangas, Annaleena & Sahaym, Arvin & Oo, Pyayt, 2020. "Bellwether and the herd? Unpacking the u-shaped relationship between prior funding and subsequent contributions in reward-based crowdfunding," Journal of Business Venturing, Elsevier, vol. 35(2).
    19. Thomas Clauss & Thomas Niemand & Sascha Kraus & Patrick Schnetzer & Alexander Brem, 2019. "Increasing Crowdfunding Success Through Social Media: The Importance Of Reach And Utilisation In Reward-Based Crowdfunding," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 24(03), pages 1-30, May.
    20. Yan Lin & Wai Fong Boh, 2020. "How different Are crowdfunders? Examining archetypes of crowdfunders," Journal of the Association for Information Science & Technology, Association for Information Science & Technology, vol. 71(11), pages 1357-1370, November.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:tefoso:v:152:y:2020:i:c:s0040162519306547. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.sciencedirect.com/science/journal/00401625 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.