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Can an early exit mechanism attract more pledges in equity-based crowdfunding? Evidence from China

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  • Bi, Gongbing
  • Lv, Jiancheng

Abstract

This paper aims to explore the impact of the early exit mechanism on equity-based crowdfunding performance. We conducted the empirical test using the method of propensity score matching on the data from a Chinese crowdfunding platform. The results demonstrate that the adoption of early exit options hurts the funding performance. This negative impact is mainly derived from the value-added investors’ dislike for such an exit mechanism. In contrast, small investors have no apparent preference for projects with or without early exit options.

Suggested Citation

  • Bi, Gongbing & Lv, Jiancheng, 2023. "Can an early exit mechanism attract more pledges in equity-based crowdfunding? Evidence from China," Finance Research Letters, Elsevier, vol. 56(C).
    • Handle: RePEc:eee:finlet:v:56:y:2023:i:c:s154461232300538x
    DOI: 10.1016/j.frl.2023.104166
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    Cited by:

    1. Pommet, Sophie & Sannajust, Aurélie & Xu, Qing, 2023. "Rating of equity crowdfunding platforms," Finance Research Letters, Elsevier, vol. 58(PD).

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