“Information Disclosure and Crowdfunding: An Empirical Analysis of the Disclosure of Project Risk” by Dr. Keongtae Kim
Dr. Keongtae Kim
Department of Information Systems
City University of Hong Kong
A key concern of crowdfunding platforms is the information asymmetry between creators and backers, and they often implement platform-wide rules to improve environments of information sharing. This paper combines multiple empirical methods (i.e., a differences-in -difference design, online experiments, and a machine learning method with text mining) to estimate the impact of a crowdfunding platform’s policy requiring the disclosure of project risk on behaviors of market participants. We find that the new disclosure policy leads to the launch of fewer projects, not only failed but also successful. The effect is stronger for creators bearing higher disclosure costs in technology projects, whereas we do not see any significant difference in non-technology projects. We also observe negative responses of backers to the new policy and show similar, contrasting effects on backing between technology and non-technology projects. The source of disclosure and the contents and presentation of disclosed information are valuable for backers in technology categories, while those are not in non-technology. Overall, our study provides implications for disclosure policies in crowd-based marketplaces and guidance for market participants.