Workshop’s Topic: This study explores the impact of voluntarily disclosing sensitive cost information on the funding performance of crowdfunding campaigns. Unlike traditional marketing enhancements, revealing the project budget serves as an innovative way to inform the crowd about the operations required to develop and execute an entrepreneurship project, reflecting the emerging trend of cost transparency in the retail sector, as documented in experiment and field studies. The research further investigates the varying effects of this disclosure based on the gender of the campaign creator and the nature of the cost items (fixed versus variable costs). Our methodology and findings are based on data collected following the introduction of Kickstarters’ Project Budget tool in 2019. We analyzed our data using coarsened exact matching to differentiate between projects that disclosed their budgets and those that did not. To mitigate the potential bias from the voluntary provision of budget information, we employed an endogenous treatment effect model and peer average-style instruments. Our analysis revealed that disclosing budget information can more than double funding performance, outperforming many other information disclosure mechanisms reported in the literature. Female project creators, in particular, benefitted 20%-30% more than their male counterparts. Although a higher ratio of fixed costs to total costs, suggesting a larger profit margin, slightly decreased the benefits of disclosure, it did not reverse the positive impact of cost transparency. Our findings demonstrate robustness across multiple robustness checks. This paper is under the third round review at MSOM.

Time and Location: 10:00 AM (GMT+8), Room A523 (School of Management)

Language: Bilingual (Chinese and English)