Finding the loudest megaphone: recognition rewards and narcissistic investors

The JOBS Act of 2012 established the regulatory infrastructure for crowdfunding platforms to offer securities to the public. The institutional framework of securities-based crowdfunding platforms adopts aspects of venture capital and rewards-based crowdfunding markets, with startups offering rewards in addition to equity. Using an experiment, I investigate whether a certain type of reward, which I call a recognition reward, tends to attract a narcissistic investor base, which, in turn, leads to an increase in a startup’s social media presence. I provide evidence that higher levels of narcissism are associated with a higher value being placed on recognition rewards. In addition, I find that narcissists are more likely to post about their investment on social media, and that this is especially true when rewards are offered. A simulation analysis suggests that offering recognition rewards increases the chances that a crowdfunding campaign will be funded and that its investors will post about it on social media. Since higher levels of narcissism are associated with a greater number of friends and followers on social media websites, the simulation also shows that more people are likely to be exposed to the crowdfunding campaign when recognition rewards are offered to investors. Social media exposure allows crowdfunding campaigns to gain attention via social media without violating the restrictions placed on general solicitation, and may also lead to increased advertisement of their products after a campaign is completed.

Name thesis:degree_name

Ph.D.

Level thesis:degree_level

Dissertation

Discipline thesis:degree_discipline

Accountancy

Grantor

University of Illinois at Urbana-Champaign

Year dc:date

2016

Author dc:creator

• Stern, Matthew T

Contributors dc:contributor

• Elliott, Wynter B.
• Peecher, Mark E.
• Hobson, Jessen L.
• Brown, Timothy J
• Weisbenner, Scott

• crowdfunding
• social media
• narcissism

Statement dc:rights

• Copyright 2016 Matthew Stern

Language dc:language

en

Handle dc:identifier

http://hdl.handle.net/2142/90803

OAI identifier oai:identifier

oai:www.ideals.illinois.edu:2142/90803