Working Paper: CEPR ID: DP16200
Authors: Andreas Barth; Valerie Laturnus; Sasan Mansouri; Alexander F. Wagner
Abstract: This paper studies the contribution of analysts to the functioning and failure of the market for Initial Coin Offerings (ICOs). The assessments of freelancing analysts exhibit biases due to reciprocal interactions of analysts with ICO team members. Even favorably rated ICOs tend to fail raising some capital when a greater portion of their ratings reciprocate prior ratings. 90 days after listing on an exchange the market capitalization relative to the initial funds raised is smaller for tokens with more reciprocal ratings. These findings suggest that the failure of ICOs is related to conflicts of interest.
Keywords: analysts; asymmetric information; fintech; initial coin offering; ICO
JEL Codes: G14; G24; L26; D82; D83
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| analysts' prior performance (G17) | biased ratings (D91) |
| characteristics of the ICOs being rated (G24) | biased ratings (D91) |
| reciprocal ratings (C71) | biased ratings (D91) |
| biased ratings (D91) | success of ICOs (G13) |
| reciprocal ratings (C71) | success of ICOs (G13) |