Abstract

Knowledge plays a critical role in overcoming adverse selection problems in investments made in new ventures. In equity crowdfunding, the large crowd has differing levels of knowledge and skills used in their investment decision-making process. These differences in available knowledge means that the crowd will differ in their ability to resolve information asymmetries and make investments. Since crowdfunding requires a large number of individual investors, it is important that they are able to resolve information asymmetries. Participation in equity crowdfunding provides opportunities for the crowd with less knowledge to learn from other investors. This study examines how the crowd learns and develops new knowledge from participation in equity crowdfunding by looking at the impacts of information distribution by members of the crowd through the number of comments and views made in the discussion board on successful funding.

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