Arbeitspapier

Does a Local Bias Exist in Equity Crowdfunding?

We use hand-collected data of 20,460 investment decisions and two distinct portals to analyze whether investors in equity crowdfunding direct their investments to local firms. In line with agency theory, the results suggest that investors exhibit a local bias, even when we control for family and friends. In addition to the regular crowd, our sample includes angel-like investors, who invest considerable amounts and exhibit a larger local bias. Well-diversified investors are less likely to suffer from this behavioral anomaly. The data further show that portal design is important for attracting investors more prone to having a local bias. Overall, we find that investors who direct their investments to local firms more often pick start-ups that run into insolvency or are dissolved, which indicates that local investments in equity crowdfunding constitute a behavioral anomaly rather and a rational preference. Here again, however, portal design plays a crucial role.

Sprache
Englisch

Erschienen in
Series: CESifo Working Paper ; No. 8154

Klassifikation
Wirtschaft
Portfolio Choice; Investment Decisions
Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies
Business and Securities Law
New Firms; Startups
Thema
equity crowdfunding
crowdinvesting
local bias
individual investor behavior
entrepreneurial finance

Ereignis
Geistige Schöpfung
(wer)
Hornuf, Lars
Schmitt, Matthias
Stenzhorn, Eliza
Ereignis
Veröffentlichung
(wer)
Center for Economic Studies and ifo Institute (CESifo)
(wo)
Munich
(wann)
2020

Handle
Letzte Aktualisierung
10.03.2025, 11:45 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Hornuf, Lars
  • Schmitt, Matthias
  • Stenzhorn, Eliza
  • Center for Economic Studies and ifo Institute (CESifo)

Entstanden

  • 2020

Ähnliche Objekte (12)