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A sense of risk: Responses to crowdfunding risk disclosures

Author

Listed:
  • Shrestha, Prabal

    (Université catholique de Louvain, LIDAM/LFIN, Belgium)

  • Thewissen, James
  • Arslan-Ayaydin, Özgür
  • Parhankangas, Annaleena

Abstract

This paper examines how reward-based crowdfunding backers respond to risk disclosures. Combining theoretical frameworks from financial accounting with the risk perception literature, we adopt an abductive research approach to explore various nuances that influence backers' tolerance for risk information. In addition to identifying the general dynamics in backers' risk interpretation, we highlight the complexities introduced by differences in the disclosure's semantic content, expressed feelings, and the discloser's background attributes. Relying on a hierarchical Bayesian mixture model, we first identify a positive curvilinear relationship between risk information quantity and crowdfunding success. We then demonstrate the influences of what is disclosed, how it is disclosed, and who discloses it, while emphasizing the context-bound specificities of individual project types.

Suggested Citation

  • Shrestha, Prabal & Thewissen, James & Arslan-Ayaydin, Özgür & Parhankangas, Annaleena, 2024. "A sense of risk: Responses to crowdfunding risk disclosures," LIDAM Reprints LFIN 2024016, Université catholique de Louvain, Louvain Finance (LFIN).
    • Handle: RePEc:ajf:louvlr:2024016
    DOI: https://doi.org/10.1002/sej.1480
    Note: In: Strategic Entrepreneurship Journal, 2023, vol. 17(4), p. 925-970
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