Publications
TUM FinTech Research Papers
TUM FinTech Research Papers provides an overview of state-of-the-art research results. Some of the papers are pre-peer-review. For this reason, we invite critical comments and hope to spur a constructive debate.
Peer-reviewed publications
Journal Article
2023
Cybercrime on the Ethereum Blockchain
Paul P. Momtaz, Lars Hornuf, Rachel J. Nam and Ye Yuan
TUM FinTech Working Paper
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 …
Journal Article
2023
The Financial and Non-Financial Performance of Token-Based Crowdfunding: Certification Arbitrage, Investor Choice, and the Optimal Timing of ICOs
Niclas Dombrowski, Wolfgang Drobetz, Lars Hornuf and Paul P. Momtaz
TUM FinTech Working Paper
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 …
Journal Article
2023
Performance Measurement of Crypto Funds
Niclas Dombrowski, Wolfgang Drobetz and Paul P. Momtaz
TUM FinTech Working Paper
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 …
Journal Article
2023
Emotions in New Venture Teams: Affects as Signals, Emotional Diversity, and Valuation Effects in Initial Coin Offerings (ICOs)
Paul P. Momtaz
TUM FinTech Working Paper
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, …
Journal Article
2022
Some Very Simple Economics of Web3 and the Metaverse
Paul P. Momtaz
TUM FinTech Working Paper
The Metaverse refers to a shared vision among technology entrepreneurs of a three dimensional virtual world, an embodied internet with humans and the physical world in it. As such, the Metaverse is thought to expand the domain of human activity by overcoming spatial, temporal, and resource-related constraints imposed by nature. The technological infrastructure of the …
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Journal Article
2022
The Rise of Decentralized Autonomous Organizations (DAOs): a first empirical glimpse
Cristiano Bellavitis, Christian Fisch and Paul P. Momtaz
TUM FinTech Working Paper
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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Journal Article
2022
Decentralized Finance, Crypto Funds, and Value Creation in Tokenized Firms
Douglas Cumming, Niclas Dombrowski, Wolfgang Drobetz and Paul P. Momtaz
TUM FinTech Working Paper
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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Journal Article
2022
Is Decentralized Finance (DeFi) Efficient?
Paul P. Momtaz
TUM FinTech Working Paper
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. …
Journal Article
2021
Financing Sustainable Entrepreneurship: ESG Measurement, Valuation, and Performance in Token Offerings*
Paul P. Momtaz and Sasan Mansouri
TUM FinTech Working Paper
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 …
Journal Article
2021
The Pricing and Performance of Cryptocurrency
Paul P. Momtaz
TUM FinTech Working Paper
This paper examines the performance of cryptocurrencies issued in initial coin offerings (ICOs) over a three-year period after the initial exchange listing. Average (median) ICO underpricing amounts to 15% (3%), even though 4 out of 10 ICOs destroy value on the first trading day. Liquidity, market capitalization, and high-low price ratios predict returns. Long-run buy-and-hold …
Journal Article
2021
Entrepreneurial Finance and Moral Hazard: Evidence from Token Offerings
Paul P. Momtaz
TUM FinTech Working Paper
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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Journal Article
2021
Institutional investors and post-ICO performance: an empirical analysis of investor returns in initial coin offerings (ICOs)
Paul P. Momtaz and Christian Fisch
TUM FinTech Working Paper
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 …
Journal Article
2020
Initial Coin Offerings
Paul P. Momtaz
TUM FinTech Working Paper
This paper examines the market for initial coin offerings (ICOs). ICOs are smart contracts based on blockchain technology that are designed for entrepreneurs to raise external finance by issuing tokens without an intermediary. Unlike existing mechanisms for early stage finance, tokens potentially provide investors with rapid opportunities thanks to liquid trading platforms. The marketability of …