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Cybercrime on the Ethereum Blockchain

We propose a taxonomy of cybercrime on the Ethereum blockchain and examine how cybercrime impacts victims’ risk-taking and returns. Our difference-in-differences analysis of a sample of victims and matched non-victims suggests that victims increase their long-term total risk-taking and earn lower risk-adjusted returns in the post-cybercrime period. Victims’ long-term total risk-taking increases because they increase …

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The Financial and Non-Financial Performance of Token-Based Crowdfunding: Certification Arbitrage, Investor Choice, and the Optimal Timing of ICOs

What role does the selection of an investor and the timing of financing play in initial coin offerings (ICOs)? We investigate the operating and financial performance of ventures conducting ICOs with different types of investors at different points in the ventures’ life cycle. We find that, relative to purely crowdfunded ICO ventures, institutional investor-backed ICO …

The Financial and Non-Financial Performance of Token-Based Crowdfunding: Certification Arbitrage, Investor Choice, and the Optimal Timing of ICOs Read More »

Performance Measurement of Crypto Funds

Crypto funds (CFs) are a growing intermediary in cryptocurrency markets. We evaluate CF performance using metrics based on alphas, value at risk, lower partial moments, and maximum drawdown. The performance of actively managed CFs is heterogenous: While the average fund in our sample does not outperform the overall cryptocurrency market, there seem to be some …

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Emotions in New Venture Teams: Affects as Signals, Emotional Diversity, and Valuation Effects in Initial Coin Offerings (ICOs)

New Venture Teams’ (NVTs’) collective emotions impact startup valuations through their intensity and diversity. I identify NVTs’ affective traits with artificial emotional intelligence by tracking 2,520 individuals across 165 NVTs during their Initial Coin Offerings (ICOs). The level of NVTs’ negative affects correlates with lower valuations, while within-NVT emotional diversity has a value-increasing effect. Intuitively, …

Emotions in New Venture Teams: Affects as Signals, Emotional Diversity, and Valuation Effects in Initial Coin Offerings (ICOs) Read More »

The Rise of Decentralized Autonomous Organizations (DAOs): a first empirical glimpse

Blockchain technology and smart contracts are catalysts for decentralization and disintermediation. These new technologies reduce transaction costs, agency costs, and offer a basis for trustless social and economic interactions. They are fueling new business models for decentralized platforms and have revolutionized crowdfunding. A recent trend, Decentralized Autonomous Organizations (DAOs), stands to fundamentally transform organizing and …

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Decentralized Finance, Crypto Funds, and Value Creation in Tokenized Firms

Crypto funds (CFs) represent a novel investor type in entrepreneurial finance. CFs intermediate Decentralized Finance (DeFi) markets by pooling contributions from crowd investors and investing in tokenized startups, combining venture- and hedge-style investment strategies. We compile a unique dataset combining token-based crowdfunding (Initial Coin Offering, ICO) data with proprietary performance data of CFs. CF backed …

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Is Decentralized Finance (DeFi) Efficient?

This paper examines the efficiency of the Initial Coin Offering (ICO) market through a search theoretical lens. Search intensity associated with the process of identifying valuable startups is increasing in market granularity. Blockchain technology increases market granularity because asset tokenization lowers entry barriers. Lower-end entrants, however, increase aggregate search intensity but may lack search skills. …

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Financing Sustainable Entrepreneurship: ESG Measurement, Valuation, and Performance in Token Offerings*

Sustainable Entrepreneurship (SE) seeks to attain profitability and sustainability goals. A major research gap concerns the economic attractiveness of SE for entrepreneurs and investors. The question is ambiguous because sustainability orientation creates costly constraints, while startups cannot fully appropriate their positive externalities. We relate startups’ Environment, Society and Governance (ESG) properties obtained from a machine-learning …

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Entrepreneurial Finance and Moral Hazard: Evidence from Token Offerings

This paper provides the first evidence of a moral hazard in signaling in an entrepreneurial finance context, by examining token offerings or Initial Coin Offerings (ICOs). Entrepreneurs ability to signal quality is crucial to succeeding in the competition for growth capital. However, the absence of institutions that verify endogenous signals may induce a moral hazard …

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Institutional investors and post-ICO performance: an empirical analysis of investor returns in initial coin offerings (ICOs)

We examine the role of institutional investors in initial coin offerings (ICOs). Taking a financial investor’s perspective, we assess the determinants of post-ICO performance via buy-and hold abnormal returns in a sample of 565 ICO ventures. Conceptually, we argue that institutional investors’ superior screening (selection effect) and coaching abilities (treatment effect) enable them to partly …

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