Discretionary tone in reward-based crowdfunding: Do project owners talk their way to success? | Episode No.97

Workshop’s Topic: This study examines the relationship between abnormal tone and reward-based crowdfunding (RBC) project performance using Kickstarter data from 2009 to 2020. We document a negative relationship between abnormal tone in the RBC campaign section (Story) and project performance, but a positive relationship between abnormal tone in the risks and challenges section (Risk) and funding success. We find that common law jurisprudence strongly moderates the success of projects with abnormal tone in the Risk section compared to civil law jurisprudence. Using US SEC equity crowdfunding case law, we find that the exogenous shock reduces the effect of abnormal tone in both the Story and Risk sections. Further investigation of the simultaneous effect of abnormal tone in the two sections shows that the increase in discretionary tone, being overly optimistic, has a negative effect on funding performance. Finally, based on a Sent-Latent-Dirichlet machine learning allocation model, we explore up to 70 specific risk categories embedded in Kickstarter projects, and we find that eight of them, namely downstream risk, international risk, product launch risk, cost risk, funding risk, product quality risk, stakeholder risk, and human resource risk, are strongly and negatively associated with project success.

Time and Location: 9:30-12:30 AM (GMT+8), Room A423 (School of Management)

Language: Bilingual (Chinese and English)

Introduction of Speakers

Assoc. Prof. George SHAN

University of Western Australia, Business School

Dr. George Shan is an Associate Professor in the Department of Accounting and Finance in the Business School at University of Western Australia. He holds a Bachelor of Commerce, a Bachelor of Applied Finance, a Master of Commerce (Accounting) and a PhD in Accounting and Corporate Governance. George is a CA (Australia), CPA (Australia) and CMA (Australia) and has lectured at several other universities including University of South Australia, University of Ballarat, University of Adelaide and University of Rome Tor Vergata in Financial Accounting, Management Accounting, Corporate Accounting, Accounting Concepts & Practices, Corporate Governance & Accountability, Investment Banking & Project Finance, Portfolio & Fund Management and Financial Risk Analysis. He is a registered primary supervisor for PhD students and his current research areas and interests include corporate governance and related accounting and finance topics (i.e. corporate performance, bad debt control, accounting quality, earnings management, tunneling, related party transactions, audit quality, risk management and corporate diversification), SOE reform, corporate social and environmental reporting and carbon accounting.