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Is the crowd sensitive to distance?—how investment decisions differ by investor type

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Listed:
  • Christina Guenther

    (WHU—Otto Beisheim School of Management)

  • Sofia Johan

    (York University)

  • Denis Schweizer

    (Concordia University)

Abstract

This paper presents the first evidence of the influence of geographic distance among retail, accredited, and overseas investors and venture location in an equity crowdfunding context. By analyzing investment decisions, we show that geographic distance is negatively correlated with investment probability for all home country investors. Our comparison of home country and overseas investors reveals that overseas investors are not sensitive to distance. However, when comparing only home country investors (subdivided into retail and accredited), we document that both investor types are similarly sensitive to the distance of possible ventures.

Suggested Citation

  • Christina Guenther & Sofia Johan & Denis Schweizer, 2018. "Is the crowd sensitive to distance?—how investment decisions differ by investor type," Small Business Economics, Springer, vol. 50(2), pages 289-305, February.
    • Handle: RePEc:kap:sbusec:v:50:y:2018:i:2:d:10.1007_s11187-016-9834-6
    DOI: 10.1007/s11187-016-9834-6
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    More about this item

    Keywords

    Distance; Equity crowdfunding; Entrepreneurial finance; Entrepreneurship; Home bias; Internet;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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