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Ban, Boom, and Echo! Entrepreneurship and Initial Coin Offerings

Author

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  • Cristiano Bellavitis
  • Douglas Cumming
  • Tom Vanacker

Abstract

Regulatory spillovers occur when regulation in one country affects either the expected regulatory approach and/or entrepreneurial finance markets in other countries. Drawing on institutional theory, we investigate the global implications of a regulatory spillover on entrepreneurship. We argue that regulatory spillovers have both short- and long-term effects on the number and quality of entrepreneurial finance initiatives such as Initial Coin Offerings (ICOs). Based on a large-scale sample of ICOs in 108 countries, we find that a regulatory ban of ICOs in one country causes a short-term increase in the number of low-rated ICOs in other countries and a long-term drop in the number of ICOs, especially low-rated, which increases the average ICO rating. That is, a restrictive regulation triggered a process of increased market selection.

Suggested Citation

  • Cristiano Bellavitis & Douglas Cumming & Tom Vanacker, 2022. "Ban, Boom, and Echo! Entrepreneurship and Initial Coin Offerings," Entrepreneurship Theory and Practice, , vol. 46(5), pages 1136-1169, September.
    • Handle: RePEc:sae:entthe:v:46:y:2022:i:5:p:1136-1169
    DOI: 10.1177/1042258720940114
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