IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-04692721.html
   My bibliography  Save this paper

How do equity crowdfunding investors choose their investments? An analysis based on personal values

Author

Listed:
  • Véronique Bessière

    (UM - Université de Montpellier, MRM - Montpellier Research in Management - UPVD - Université de Perpignan Via Domitia - UM - Université de Montpellier)

  • Christian Goglin

Abstract

his work analyzes the importance of personal values in equity crowdfunding investment choice. Employing a theoretical framework borrowing theories from the fields of finance, marketing, and psychology, our model proposes several antecedents for investment choice and focuses on the congruence between the investor's personal values and the values promoted by the startup during its fundraising campaign. The results of our laboratory experiment, based on real-life campaign material, suggest that the investor's personal values and interest in the project are more important than the perceived signal quality of the project in explaining the decision to invest. Furthermore, two opposed values emerge from the study-"Universalism" and "Power"-in line with the typical two-way classification of SRI investors into value-based and value-seeking investor groups.

Suggested Citation

  • Véronique Bessière & Christian Goglin, 2024. "How do equity crowdfunding investors choose their investments? An analysis based on personal values," Post-Print hal-04692721, HAL.
    • Handle: RePEc:hal:journl:hal-04692721
    Note: View the original document on HAL open archive server: https://hal.umontpellier.fr/hal-04692721v1
    as

    Download full text from publisher

    File URL: https://hal.umontpellier.fr/hal-04692721v1/document
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ren, Jie & Raghupathi, Viju & Raghupathi, Wullianallur, 2021. "Exploring the subjective nature of crowdfunding decisions," Journal of Business Venturing Insights, Elsevier, vol. 15(C).
    2. Frieder, Laura & Subrahmanyam, Avanidhar, 2005. "Brand Perceptions and the Market for Common Stock," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 40(1), pages 57-85, March.
    3. Allison, Thomas H. & Davis, Blakley C. & Webb, Justin W. & Short, Jeremy C., 2017. "Persuasion in crowdfunding: An elaboration likelihood model of crowdfunding performance," Journal of Business Venturing, Elsevier, vol. 32(6), pages 707-725.
    4. Ethan Mollick & Ramana Nanda, 2016. "Wisdom or Madness? Comparing Crowds with Expert Evaluation in Funding the Arts," Management Science, INFORMS, vol. 62(6), pages 1533-1553, June.
    5. Jörn Block & Lars Hornuf & Alexandra Moritz, 2018. "Which updates during an equity crowdfunding campaign increase crowd participation?," Small Business Economics, Springer, vol. 50(1), pages 3-27, January.
    6. Will Drover & Matthew S. Wood & Andrew Zacharakis, 2017. "Attributes of Angel and Crowdfunded Investments as Determinants of VC Screening Decisions," Entrepreneurship Theory and Practice, , vol. 41(3), pages 323-347, May.
    7. Johan Bouglet & Ghislaine Garmilis & Olivier Joffre, 2021. "La protection des investisseurs en crowdfunding : typologie des plateformes d’equity crowdfunding par les mécanismes de gouvernance," Revue de l'Entrepreneuriat, De Boeck Université, vol. 20(1), pages 37-64.
    8. Johan, Sofia & Zhang, Yelin, 2020. "Quality revealing versus overstating in equity crowdfunding," Journal of Corporate Finance, Elsevier, vol. 65(C).
    9. Lewis, Alan, 2001. "A focus group study of the motivation to invest: 'ethical/green' and 'ordinary' investors compared," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 30(4), pages 331-341.
    10. Wood, Matthew S. & Williams, David W. & Drover, Will, 2017. "Past as prologue: Entrepreneurial inaction decisions and subsequent action judgments," Journal of Business Venturing, Elsevier, vol. 32(1), pages 107-127.
    11. Maxwell, Andrew L. & Jeffrey, Scott A. & Lévesque, Moren, 2011. "Business angel early stage decision making," Journal of Business Venturing, Elsevier, vol. 26(2), pages 212-225, March.
    12. Eva Hofmann & Erik Hoelzl & Erich Kirchler, 2008. "A Comparison of Models Describing the Impact of Moral Decision Making on Investment Decisions," Journal of Business Ethics, Springer, vol. 82(1), pages 171-187, September.
    13. William Pasewark & Mark Riley, 2010. "It’s a Matter of Principle: The Role of Personal Values in Investment Decisions," Journal of Business Ethics, Springer, vol. 93(2), pages 237-253, May.
    14. Hornuf, Lars & Schwienbacher, Armin, 2018. "Market mechanisms and funding dynamics in equity crowdfunding," Journal of Corporate Finance, Elsevier, vol. 50(C), pages 556-574.
    15. Magdalena Cholakova & Bart Clarysse, 2015. "Does the Possibility to Make Equity Investments in Crowdfunding Projects Crowd Out Reward–Based Investments?," Entrepreneurship Theory and Practice, , vol. 39(1), pages 145-172, January.
    16. Kévin André & Sylvain Bureau & Arthur Gautier & Olivier Rubel, 2017. "Beyond the Opposition Between Altruism and Self-interest: Reciprocal Giving in Reward-Based Crowdfunding," Journal of Business Ethics, Springer, vol. 146(2), pages 313-332, December.
    17. Fischer, Eileen & Rebecca Reuber, A., 2014. "Online entrepreneurial communication: Mitigating uncertainty and increasing differentiation via Twitter," Journal of Business Venturing, Elsevier, vol. 29(4), pages 565-583.
    18. Allison, Thomas H. & Warnick, Benjamin J. & Davis, Blakley C. & Cardon, Melissa S., 2022. "Can you hear me now? Engendering passion and preparedness perceptions with vocal expressions in crowdfunding pitches," Journal of Business Venturing, Elsevier, vol. 37(3).
    19. Heath, Chip & Tversky, Amos, 1991. "Preference and Belief: Ambiguity and Competence in Choice under Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 4(1), pages 5-28, January.
    20. Lambert, Jérôme & Bessière, Véronique & N’Goala, Gilles, 2012. "Does expertise influence the impact of overconfidence on judgment, valuation and investment decision?," Journal of Economic Psychology, Elsevier, vol. 33(6), pages 1115-1128.
    21. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(3), pages 355-374.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Thomas Clauss & Thomas Niemand & Sascha Kraus & Patrick Schnetzer & Alexander Brem, 2019. "Increasing Crowdfunding Success Through Social Media: The Importance Of Reach And Utilisation In Reward-Based Crowdfunding," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 24(03), pages 1-30, May.
    2. Kourosh Shafi, 2021. "Investors’ evaluation criteria in equity crowdfunding," Small Business Economics, Springer, vol. 56(1), pages 3-37, January.
    3. Butticè, Vincenzo & Di Pietro, Francesca & Tenca, Francesca, 2020. "Is equity crowdfunding always good? Deal structure and the attraction of venture capital investors," Journal of Corporate Finance, Elsevier, vol. 65(C).
    4. Borello, Giuliana & De Crescenzo, Veronica & Pichler, Flavio, 2019. "Factors for success in European crowdinvesting," Journal of Economics and Business, Elsevier, vol. 106(C).
    5. Stevenson, Regan M. & Ciuchta, Michael P. & Letwin, Chaim & Dinger, Jenni M. & Vancouver, Jeffrey B., 2019. "Out of control or right on the money? Funder self-efficacy and crowd bias in equity crowdfunding," Journal of Business Venturing, Elsevier, vol. 34(2), pages 348-367.
    6. Anglin, Aaron H. & Short, Jeremy C. & Drover, Will & Stevenson, Regan M. & McKenny, Aaron F. & Allison, Thomas H., 2018. "The power of positivity? The influence of positive psychological capital language on crowdfunding performance," Journal of Business Venturing, Elsevier, vol. 33(4), pages 470-492.
    7. Roma, Paolo & Vasi, Maria & Kolympiris, Christos, 2021. "On the signaling effect of reward-based crowdfunding: (When) do later stage venture capitalists rely more on the crowd than their peers?," Research Policy, Elsevier, vol. 50(6).
    8. Douglas Cumming & Lars Hornuf & Moein Karami & Denis Schweizer, 2023. "Disentangling Crowdfunding from Fraudfunding," Journal of Business Ethics, Springer, vol. 182(4), pages 1103-1128, February.
    9. Michael E. Cummings & Hans Rawhouser & Silvio Vismara & Erin L. Hamilton, 2020. "An equity crowdfunding research agenda: evidence from stakeholder participation in the rulemaking process," Small Business Economics, Springer, vol. 54(4), pages 907-932, April.
    10. Aurélien Petit & Peter Wirtz, 2022. "Experts in the crowd and their influence on herding in reward-based crowdfunding of cultural projects," Small Business Economics, Springer, vol. 58(1), pages 419-449, January.
    11. Fabrice Hervé & Armin Schwienbacher, 2018. "Crowdfunding And Innovation," Journal of Economic Surveys, Wiley Blackwell, vol. 32(5), pages 1514-1530, December.
    12. Wesley II, Curtis L. & Kong, Dejun Tony & Lubojacky, Connor J. & Kim Saxton, M. & Saxton, Todd, 2022. "Will the startup succeed in your eyes? Venture evaluation of resource providers during entrepreneurs' informational signaling," Journal of Business Venturing, Elsevier, vol. 37(5).
    13. Maurer, Joshua D. & Creek, Steven A. & Allison, Thomas H. & Bendickson, Joshua S. & Sahaym, Arvin, 2024. "Getting to know someone in ten seconds: Social role theory and perceived personality in entrepreneurial pitch videos," Journal of Business Research, Elsevier, vol. 174(C).
    14. Alice Rossi & Tom Vanacker & Silvio Vismara, 2023. "Unsuccessful Equity Crowdfunding Offerings and the Persistence in Equity Fundraising of Family Business Start-Ups," Entrepreneurship Theory and Practice, , vol. 47(4), pages 1327-1355, July.
    15. Lars Hornuf & Eliza Stenzhorn & Tim Vintis, 2022. "Are sustainability-oriented investors different? Evidence from equity crowdfunding," The Journal of Technology Transfer, Springer, vol. 47(6), pages 1662-1689, December.
    16. W. Cai & F.H.J. Polzin & F.C. Stam, 2019. "Crowdfunding and Social Capital: A Systematic Literature Review," Working Papers 19-05, Utrecht School of Economics.
    17. Daniel Blaseg & Douglas Cumming & Michael Koetter, 2021. "Equity Crowdfunding: High-Quality or Low-Quality Entrepreneurs?," Entrepreneurship Theory and Practice, , vol. 45(3), pages 505-530, May.
    18. Felix Reichenbach & Martin Walther, 2021. "Signals in equity-based crowdfunding and risk of failure," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 7(1), pages 1-30, December.
    19. Kaminski, Jermain & Hopp, Christian & Tykvová, Tereza, 2019. "New technology assessment in entrepreneurial financing – Does crowdfunding predict venture capital investments?," Technological Forecasting and Social Change, Elsevier, vol. 139(C), pages 287-302.
    20. Johnson, Michael A. & Stevenson, Regan M. & Letwin, Chaim R., 2018. "A woman's place is in the… startup! Crowdfunder judgments, implicit bias, and the stereotype content model," Journal of Business Venturing, Elsevier, vol. 33(6), pages 813-831.

    More about this item

    Keywords

    Equity crowdfunding investment choice personal values value congruence affective reactions ethics II; Equity crowdfunding; investment choice; personal values; value congruence; affective reactions; Ethics;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-04692721. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.