Ban, Boom, and Echo! Entrepreneurship and Initial Coin Offerings. (September 2022)

• Record Type: Journal Article
• Authors: Bellavitis, Cristiano; Cumming, Douglas; Vanacker, Tom
• Other Names: Bertoni Fabio guest-editor.; Bonini Stefano guest-editor.; Capizzi Vincenzo guest-editor.; Colombo Massimo G. guest-editor.; Manigart Sophie guest-editor.
• Is Part Of: Entrepreneurship theory and practice. Volume 46:Number 5(2022)
• Page Start: 1136
• Page End: 1169
• Publication Date: 2022-09
• Subjects: entrepreneurial finance -- entrepreneurship -- institutions -- blockchain -- initial coin offering; Small business -- Periodicals; New business enterprises -- Periodicals; Entrepreneurship -- Periodicals; 658.421
• DOI: 10.1177/1042258720940114
• Languages: English
• ISSNs: 1042-2587

Abstract

Regulatory spillovers occur when regulation in one country affects either the expected regulatory approach and/or entrepreneurial finance markets in other countries. Drawing on institutional theory, we investigate the global implications of a regulatory spillover on entrepreneurship. We argue that regulatory spillovers have both short- and long-term effects on the number and quality of entrepreneurial finance initiatives such as Initial Coin Offerings (ICOs). Based on a large-scale sample of ICOs in 108 countries, we find that a regulatory ban of ICOs in one country causes a short-term increase in the number of low-rated ICOs in other countries and a long-term drop in the number of ICOs, especially low-rated, which increases the average ICO rating. That is, a restrictive regulation triggered a process of increased market selection.