Testing-the-Waters Policy With Hypothetical Investment: Evidence From Equity Crowdfunding

International audience; Digitization has enabled “testing-the-waters” in entrepreneurial finance whereby investors can make nonbinding commitments in equity crowdfunding prior to an actual campaign to ascertain interest in the project. We consider whether these nonbinding equity investment commitments are informative about actual investments during the campaign and, thus, ultimate startup funding success. The data indicate that only 18% of nonbinding commitments are, in fact, invested. The evidence is consistent with hypothetical bias. Hypothetical bias is significantly less pronounced among women and among investors living in higher income areas or in areas with higher levels of education.…

Does crowdfunding make the world go round?

International audience

Determinants of Individual Investment Decisions in Investment-Based Crowdfunding

We investigate determinants of investment decisions in investment-based (equity and real estate) crowdfunding, using a novel investment-, investor- and campaign-level database. We find that this market is a man's world, with nearly 93% of investments made by men. Consistent with behavioral and finance theories, we find that women invest less in the riskiest investments but more in safer ones. Further analyses show that these findings are better explained by differences in risk aversion than differences in overconfidence between men and women. Investors located in an area considered more "sociable" (socially friendly) also invest more, but only if the investor is a woman. Overall, the findin…

Quelle allocation optimale pour une caisse de retraite par capitalisation à prestations définies en France sur la période 1991-1998 ?

Médias et sentiment sur les marchés actions européens : influence de la culture nationale

Dans cet article, nous développons une nouvelle mesure du sentiment des investisseurs en Europe à partir d’une analyse de contenus d’articles issus du Financial Times. Dans la lignée des travaux de finance comportementale, nous trouvons que notre mesure du sentiment influence la performance boursière des entreprises difficiles à évaluer et à arbitrer. Par ailleurs, nous montrons que la culture nationale influence le lien entre sentiment des investisseurs et rentabilités boursières. L’impact du sentiment se révèle plus prononcé pour les pays les plus culturellement enclins à des comportements de sur-réaction ou grégaires.

Hypothetical Investment Bias

Young, entrepreneurial firms are particularly dependent on external investors to sustain their development. Are non-binding equity investment commitments informative? Our large sample evidence in the context of equity crowdfunding shows that only 18% of non-binding commitments made by investors in entrepreneurial firms are actually invested. The evidence is consistent with hypothetical bias. Hypothetical bias is significantly less pronounced among women, and among investors with greater social capital, proxied by education and wealth. While investment intentions are only partially reliable at the individual level, the aggregate amount of collected investment intentions is a strong predictor…

L’édito du rapport de développement durable : un signal prédictif d’inclusion d’une entreprise dans un indice de performance RSE ?

International audience

Identifying Start-Up Success : Testing-The-Waters Policy with Hypothetical Investment

International audience

Faut-il acheter des actions des entreprises apparaissant sur les listes noires du Conseil des investisseurs institutionnels ?

The Long Run Impact of Coordinated Activism Initiated by the Council of the Institutional Investors (CII) on Returns of the Targeted Firms Shares A pension funds money manager faces the following alternative when it holds under-performing shares : either it sells them, or it keeps them and seeks to influence the managers of the firms involved. Several reasons can explain why American pension funds followed the second way. Such a strategy contribute to the development of a practice called shareholder activism. This article focuses particularly on this phenomenon. For this purpose, author describes the various existing practices of activism (proxy targeting and performance targeting). Then, h…

L'impact de l'activisme des fonds de pension américains : l'exemple du Conseil des Investisseurs Institutionnels

Les fonds de retraite américains ont participé au développement d’une pratique appelée activisme des actionnaires. L’activisme peut être vu comme l’expression du mécontentement d’un actionnaire auprès des dirigeants d’une firme. Nous essayons de voir si l’activisme institutionnel coordonné par le CII (Conseil des Investisseurs Institutionnels) influence l’évolution future des rentabilités des actions des entreprises concernées. La manifestation de l’activisme pratiqué par ce conseil est la publication, chaque année depuis 1991, d’une liste d’entreprises connaissant des déficits en termes de performance et / ou de corporate governance. Nous utilisons la méthodologie des études d’événement po…

Cas en finance d'entreprise

National audience

Supplementary Material 1 - Supplemental material for Testing-the-Waters Policy With Hypothetical Investment: Evidence From Equity Crowdfunding

Supplemental material, Supplementary Material 1, for Testing-the-Waters Policy With Hypothetical Investment: Evidence From Equity Crowdfunding by Douglas Cumming, Fabrice Hervé, Elodie Manthé and Armin Schwienbacher in Entrepreneurship Theory and Practice

Voting in Equity Crowdfunding Projects

Eco-Anxiety, Connectedness to Nature & Green Equity Investments

International audience; Drawing on a survey of 671 French individual investors, we document for the first time the connection between emotions towards the environment and investment in green funds. Both eco-anxiety and connectedness to nature have a significant impact on deciding to invest in green funds, but, interestingly, do not exert any influence on the amount invested. Hence, investing in green funds seems to be a way to buy a good conscience towards the environment, but the good deed ends there since the amount itself is not linked to environmentally related emotions.

CROWDFUNDING AND INNOVATION

Entrepreneurs have started relying on crowdfunding to fund their investments. This paper surveys the literature linking crowdfunding with innovation in entrepreneurial firms. Two distinct areas are discussed. First, crowdfunding has the potential to foster innovation by offering new sources of capital to innovation‐driven firms and thereby reduce the funding gap for innovative startups. Second, crowdfunding offers a way for the crowd to participate in the innovation process by providing feedback to the entrepreneur. This feedback can take various forms, including providing ideas on the development of the product during and after the campaign (in the spirit of crowdsourcing), and providing v…

Investissement en equity crowdfunding : comment « jauger » un projet (et pourquoi WiSEED n’affiche pas le montant collecté) ?

Do Crowdfunders Prefer Round Numbers?

Les performances des fonds de pension britanniques investis en actions dépendent-elles des phases de marché ?

L’évolution de la structure de financement des organisations muséales : éclairage sur le rôle des endowment funds

Rompant avec une longue tradition de financement public, certaines grandes institutions muséales européennes voient la part de leur financement privé augmenter considérablement. Cette évolution s’accompagne de la possibilité d’investir cet argent sur les marchés financiers à travers des endowment funds. L’objectif de cet article est de proposer un éclairage sur ce nouveau moyen offert aux musées de gérer leur capital financier. Pour se faire, nous examinerons le système muséal américain où les endowments sont la règle. Cette analyse nous permettra de comprendre ce que recouvre cette notion, d’appréhender ses modalités de mise en oeuvre et de saisir les bénéfices et les risques auxquels les …

Le crowdfunding favorise-t-il l’innovation ?

Thème du congrès : Les enjeux de l’innovation : quelles politiques ?, quelles gouvernances ?; International audience

Hypothetical bias in equity crowdfunding

International audience; Young, entrepreneurial firms are particularly dependent on external investors to sustain their development. Are non-binding equity investment commitments informative? Our large sample evidence in the context of equity crowdfunding shows that only 18% of non-binding commitments made by investors in entrepreneurial firms are actually invested. The evidence is consistent with hypothetical bias. Hypothetical bias is significantly less pronounced among women, and among investors with greater social capital, proxied by education and wealth. While investment intentions are only partially reliable at the individual level, the aggregate amount of collected investment intentio…

Noise traders and smart money: Evidence from online searches

International audience; Traditional finance theory considers that the impact of noise traders' attention on asset prices is offset by attention from smart investors. This paper uses online search data to study the influence of noise traders and smart investors on stock returns and volatility. Adopting an original approach, we construct a proxy for smart investor attention based on investors' online search behavior provided by Wikipedia Page Traffic. We combine this new measure with a standard measure of noise traders' attention as proxied by Google Search Volume Index. We show for a sample of 87 French firms over the period 2008–2018 that only noise traders' attention influences stock retur…

Dividend Policy and Managerial Overconfidence: French Evidence

This paper examines the impact of managerial overconfidence on dividend policy.The literature has identified two strands of reasoning. Deshmukh et al. (2013) argue that overconfident managers with relatively high investment needs perceive external funds as more costly than internal financing. This leads them to pay out lower dividends. Conversely, Wu and Liu (2011) claim that overconfident CEOs expect higher future cash flows and are prone to pay out higher dividends. We study a sample of 120 French firms for the period 2000–2015. Our results provide evidence that CEOs’ overconfidence plays a decisive role in explaining the dividend policy of French firms. Managerial overconfidence exerts a…

Is Big Brother Watching Us? Google, Investor Sentiment and the Stock Market

International audience; This paper proposes a novel measure of French investor sentiment based on the volume of internet search reported by Google Trends. We find that our sentiment indicator correlates well with alternative sentiment measures often used in the literature. Furthermore, we find that investor sentiment influences the behavior of mutual fund investors. The results also reveal evidence about short-run predictability in return. An increase in our sentiment index leads to short-term return reversal. The reversal pattern is more pronounced for smaller firms than larger firms, consistent with the predictions of noise trader's models.