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Conflicted Analysts and Initial Coin Offerings

Author

Listed:
  • Andreas Barth

    (Goethe University Frankfurt, 60629 Frankfurt am Main, Germany; Saarland University Saarbrücken, 66123 Saarbrücken, Germany; Leibniz-Institut für Wirtschaftsforschung Halle, 06108 Halle (Saale), Germany)

  • Valerie Laturnus

    (Goethe University Frankfurt, 60629 Frankfurt am Main, Germany)

  • Sasan Mansouri

    (Goethe University Frankfurt, 60629 Frankfurt am Main, Germany; Leibniz-Institut für Wirtschaftsforschung Halle, 06108 Halle (Saale), Germany)

  • Alexander F. Wagner

    (University of Zurich, 8006 Zürich, Switzerland; Centre for Economic Policy Research (CEPR), 75007 Paris, France; European Corporate Governance Institute, 1000 Brussels, Belgium; Swiss Finance Institute, 8006 Zürich, Switzerland)

Abstract

This paper studies the contribution of analysts to the functioning and failure of the market for initial coin offerings (ICOs). The assessments of freelancing analysts exhibit biases because of reciprocal interactions of analysts with ICO team members. Even favorably rated ICOs tend to fail raising some capital when a greater portion of their ratings reciprocate prior ratings. Ninety days after listing on an exchange, the market capitalization relative to the initial funds raised is smaller for tokens with more reciprocal ratings. These findings suggest that conflicts of interest help explain the failure of ICOs.

Suggested Citation

  • Andreas Barth & Valerie Laturnus & Sasan Mansouri & Alexander F. Wagner, 2023. "Conflicted Analysts and Initial Coin Offerings," Management Science, INFORMS, vol. 69(11), pages 6641-6666, November.
    • Handle: RePEc:inm:ormnsc:v:69:y:2023:i:11:p:6641-6666
    DOI: 10.1287/mnsc.2021.02928
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