ICO vs. Equity Financing under Imperfect, Complex and Asymmetric Information
This paper offers a game-theoretic model of a firm that raises funds for financing an innovative business project and chooses between ICO (initial coin offering) and equity financing. The model is based on information problems associated with both ICO and equity financing well-documented in the lite...
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| Format: | Article |
| Language: | English |
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MDPI AG
2023-12-01
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| Series: | FinTech |
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| Online Access: | https://www.mdpi.com/2674-1032/3/1/2 |
| _version_ | 1797241123958161408 |
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| author | Anton Miglo |
| author_facet | Anton Miglo |
| author_sort | Anton Miglo |
| collection | DOAJ |
| description | This paper offers a game-theoretic model of a firm that raises funds for financing an innovative business project and chooses between ICO (initial coin offering) and equity financing. The model is based on information problems associated with both ICO and equity financing well-documented in the literature. Several new features are introduced, for example, information complexity, which is analyzed along with a more traditional imperfect information and an asymmetric information approach. The model provides several implications that have not yet been tested. For example, we find that the message complexity can be beneficial for firms conducting ICOs. Also, high-quality projects can use ICO as a signal of quality. Thirdly, the average size of projects undertaking equity financing is larger than that of firms conducting ICO. |
| first_indexed | 2024-04-24T18:18:20Z |
| format | Article |
| id | doaj.art-ac7ef554a571422b97d692d0277b8470 |
| institution | Directory Open Access Journal |
| issn | 2674-1032 |
| language | English |
| last_indexed | 2024-04-24T18:18:20Z |
| publishDate | 2023-12-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | FinTech |
| spelling | doaj.art-ac7ef554a571422b97d692d0277b84702024-03-27T13:38:05ZengMDPI AGFinTech2674-10322023-12-0131173910.3390/fintech3010002ICO vs. Equity Financing under Imperfect, Complex and Asymmetric InformationAnton Miglo0Adam Smith Business School, College of Social Science, University of Glasgow, Glasgow G128QQ, UKThis paper offers a game-theoretic model of a firm that raises funds for financing an innovative business project and chooses between ICO (initial coin offering) and equity financing. The model is based on information problems associated with both ICO and equity financing well-documented in the literature. Several new features are introduced, for example, information complexity, which is analyzed along with a more traditional imperfect information and an asymmetric information approach. The model provides several implications that have not yet been tested. For example, we find that the message complexity can be beneficial for firms conducting ICOs. Also, high-quality projects can use ICO as a signal of quality. Thirdly, the average size of projects undertaking equity financing is larger than that of firms conducting ICO.https://www.mdpi.com/2674-1032/3/1/2asymmetric informationcomplex informationinitial coin offering (ICO)equity financingsignaling |
| spellingShingle | Anton Miglo ICO vs. Equity Financing under Imperfect, Complex and Asymmetric Information FinTech asymmetric information complex information initial coin offering (ICO) equity financing signaling |
| title | ICO vs. Equity Financing under Imperfect, Complex and Asymmetric Information |
| title_full | ICO vs. Equity Financing under Imperfect, Complex and Asymmetric Information |
| title_fullStr | ICO vs. Equity Financing under Imperfect, Complex and Asymmetric Information |
| title_full_unstemmed | ICO vs. Equity Financing under Imperfect, Complex and Asymmetric Information |
| title_short | ICO vs. Equity Financing under Imperfect, Complex and Asymmetric Information |
| title_sort | ico vs equity financing under imperfect complex and asymmetric information |
| topic | asymmetric information complex information initial coin offering (ICO) equity financing signaling |
| url | https://www.mdpi.com/2674-1032/3/1/2 |
| work_keys_str_mv | AT antonmiglo icovsequityfinancingunderimperfectcomplexandasymmetricinformation |