Forthcoming Papers

“Optimal Capital Structure with Imperfect Competition” by Egor Matveyev and Alexey Zhdanov

“Cultural Diversities, Lending Relationships and the Cost of Credit: Evidence from Migration” by Giorgio Albareto, Maddalena Galardo,
Paolo Emilio Mistrulli, and Bianca Sorvillo

Paper Spotlight: The Wisdom of Crowds in FinTech: Evidence from Initial Coin Offerings

Jongsub Lee

Tao Li

Donghwa Shin








Initial coin offerings are fast becoming a new type of crowdfunding for blockchain-related startups. In this type of offerings, an entrepreneur raises capital through the creation and selling of virtual currencies or “tokens,” which themselves give rights to their holders (for example, access to a platform). As is to be expected, there are severe problems of information asymmetry associated with these instruments and capital raising mechanisms, especially due to the lack of the traditional underwriting process. These challenges could lead to failures of these crowdfunding exercises. In the paper “The Wisdom of Crowds in FinTech: Evidence from Initial Coin Offerings,” Jongsub Lee, Tao Li, and Donghwa Shin investigate whether the void created by the absence of an underwriter can be filled by the “wisdom of crowds” instead, defined as the collective opinion of a group of individuals rather than that of a single expert. The authors use the weighted average of ratings issued by analysts active on a prominent rating platform to capture the wisdom of the crowds. The paper finds that favorable ratings issued by analysts with diverse backgrounds are associated with fundraising success, aggressive initial token subscriptions, and long-run returns. Interestingly, analyst ratings predict potential fraud and token-price volatility, areas of considerable interest of regulators and market participants. Put together, these results point to an important role played by online analysts to deal with information problems in blockchain-related startups. These results have implications that go beyond the initial coin offerings, since the wisdom of crowds phenomenon is becoming more pervasive among FinTech platforms.

Spotlight by Andrew Ellul
Photos courtesy of Jongsub Lee, Tao Li, Donghwa Shin
First published September 2, 2021

Submission Period Open for Cavalcade North America

The submission period for SFS Cavalcade North America 2022 is now open. To submit, please visit SFS Cavalcade North America 2022. The deadline for submissions is December 13, 2021.

Dual Submission: The Cavalcade features a dual submission option with the Review of Asset Pricing Studies and the Review of Corporate Finance Studies.

Reminder for doctoral students: For papers in which ALL co-authors are doctoral students, the submission fee is waived.

Call for Papers: Future of Financial Information Conference

Submissions are open for the 4th Future of Financial Information Conference. The conference, which features a dual submission option with RAPS and RCFS, will take place May 18-20, 2022. The RAPS sponsoring editors are Jeffrey Pontiff and Zhiguo He, and the RCFS sponsoring editor is Andrew Ellul. The submission deadline is December 20, 2021, 23:59 PST. For more details, please see the conference website.