Working Paper: NBER ID: w24774
Authors: Sabrina T. Howell; Marina Niessner; David Yermack
Abstract: Initial coin offerings (ICOs) have emerged as a new mechanism for entrepreneurial finance, with parallels to initial public offerings, venture capital, and pre-sale crowdfunding. In a sample of more than 1,500 ICOs that collectively raise $12.9 billion, we examine which issuer and ICO characteristics predict successful real outcomes (increasing issuer employment and avoiding enterprise failure). Success is associated with disclosure, credible commitment to the project, and quality signals. An instrumental variables analysis finds that ICO token exchange listing causes higher future employment, indicating that access to token liquidity has important real consequences for the enterprise.
Keywords: Initial Coin Offerings; Cryptocurrency; Token Sales; Entrepreneurial Finance
JEL Codes: G24; G32; K22; L26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| ICO token exchange listing (F33) | future employment at the issuer's firm (M51) |
| successful token listing (G13) | future employment at the issuer's firm (M51) |
| voluntary disclosures (G38) | future employment (J68) |
| prior venture capital investment (G24) | future employment (J68) |
| founder's entrepreneurial experience (M13) | future employment (J68) |