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The behavior of blockchain ventures on Twitter as a determinant for funding success

Author

Listed:
  • Simon Albrecht

    (University of Freiburg)

  • Bernhard Lutz

    (University of Freiburg)

  • Dirk Neumann

    (University of Freiburg)

Abstract

Blockchain ventures rely on a distributed funding instrument called initial coin offering (ICO). Since ICOs are not regulated, potential investors face information asymmetries and decision-making under uncertainty. In this study, we investigate whether blockchain ventures can effectively reduce these information asymmetries by utilizing signaling mechanisms on Twitter and how the resulting effects differ from those in conventional market environments. Based on a corpus of 144,492 tweets from 522 ventures, we provide empirical evidence that positive language and a high, yet steady level of interactivity with the community are linked to higher funding, while frequent stressing of time frames has the opposite effect. To the best of our knowledge, this presents the first study to analyze how the textual content of tweets can be linked to the success of blockchain ventures.

Suggested Citation

  • Simon Albrecht & Bernhard Lutz & Dirk Neumann, 2020. "The behavior of blockchain ventures on Twitter as a determinant for funding success," Electronic Markets, Springer;IIM University of St. Gallen, vol. 30(2), pages 241-257, June.
    • Handle: RePEc:spr:elmark:v:30:y:2020:i:2:d:10.1007_s12525-019-00371-w
    DOI: 10.1007/s12525-019-00371-w
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    Cited by:

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    2. Muneer M. Alshater & Mayank Joshipura & Rim El Khoury & Nohade Nasrallah, 2023. "Initial Coin Offerings: a Hybrid Empirical Review," Small Business Economics, Springer, vol. 61(3), pages 891-908, October.
    3. Thies, Ferdinand & Wallbach, Sören & Wessel, Michael & Besler, Markus & Benlian, Alexander, 2024. "Initial coin offerings and the cryptocurrency hype - the moderating role of exogenous and endogenous signals," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 144179, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    4. Nguyen, Phong Thanh & Nguyen, Linh Thi My, 2022. "Understanding platform market value through decentralization governance — An integrative model from signaling and mechanism design theory," Technological Forecasting and Social Change, Elsevier, vol. 183(C).
    5. Seigner, Benedikt David Christian & Milanov, Hana & Lundmark, Erik & Shepherd, Dean A., 2023. "Tweeting like Elon? Provocative language, new-venture status, and audience engagement on social media," Journal of Business Venturing, Elsevier, vol. 38(2).
    6. José Campino & Ana Brochado & Álvaro Rosa, 2021. "Initial Coin Offerings (ICOs): the importance of human capital," Journal of Business Economics, Springer, vol. 91(8), pages 1225-1262, October.
    7. Moritz T. Bruckner & Dennis M. Steininger & Jason Bennett Thatcher & Daniel J. Veit, 2023. "The effect of lockup and persuasion on online investment decisions: An experimental study in ICOs," Electronic Markets, Springer;IIM University of St. Gallen, vol. 33(1), pages 1-25, December.
    8. Roger W.H. Bons & Johan Versendaal & Liudmila Zavolokina & Weidong Larry Shi, 2020. "Potential and limits of Blockchain technology for networked businesses," Electronic Markets, Springer;IIM University of St. Gallen, vol. 30(2), pages 189-194, June.
    9. Nora Nahr & Marikka Heikkilä, 2022. "Uncovering the identity of Electronic Markets research through text mining techniques," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(3), pages 1257-1277, September.
    10. Marten Risius & Christoph F. Breidbach & Mathieu Chanson & Ruben Krannichfeldt & Felix Wortmann, 2023. "On the performance of blockchain-based token offerings," Electronic Markets, Springer;IIM University of St. Gallen, vol. 33(1), pages 1-19, December.
    11. Toufaily, Elissar & Zalan, Tatiana, 2024. "In blockchain we trust? Demystifying the “trust” mechanism in blockchain ecosystems," Technological Forecasting and Social Change, Elsevier, vol. 206(C).
    12. Chitsazan, Hasti & Bagheri, Afsaneh & Tajeddin, Mahdi, 2022. "Initial coin offerings (ICOs) success: Conceptualization, theories and systematic analysis of empirical studies," Technological Forecasting and Social Change, Elsevier, vol. 180(C).
    13. Boukis, Achilleas, 2023. "Storytelling in initial coin offerings: Attracting investment or gaining referrals?," Journal of Business Research, Elsevier, vol. 160(C).

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    More about this item

    Keywords

    Blockchain; Initial coin offering; Twitter; Sentiment; Social media;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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