How the quality of initial coin offering white papers influences fundraising: Using security token offerings white papers as a benchmark. Issue 1 (4th January 2023)

• Record Type: Journal Article
• Authors: Chou, Shih‐Chu; Li, Zhe‐An; Wang, Tawei; Yen, Ju‐Chun
• Is Part Of: Intelligent systems in accounting, finance and management. Volume 30:Issue 1(2023)
• Page Start: 3
• Page End: 18
• Publication Date: 2023-01-04
• Subjects: initial coin offerings -- security token offerings -- white paper; Accounting -- Data processing -- Periodicals; Business -- Data processing -- Periodicals; Expert systems (Computer science) -- Periodicals; Artificial intelligence -- Periodicals; 657.028563
• DOI: 10.1002/isaf.1527
• Languages: English
• ISSNs: 1055-615X

Abstract

Summary: In recent years, many initial coin offerings (ICOs) scams have been reported, attracting attention to this relatively new and unregulated ICO market, which lacks disclosure requirements and therefore suffers from intensifying problems of information asymmetry inherent in crowdfunding. As a prospectus‐type document, an ICO white paper serves as a major means of voluntary disclosure practices adopted by ventures seeking external financing. Given the importance of an ICO white paper and the difficulty of assessing its quality, we propose to benchmark it against white paper content for security token offerings (STOs)—a more regulated ICO subset. Using the similarity of ICO white papers with STO white papers to proxy for disclosure quality, we document that the ICO campaigns that have white papers more similar to STO white papers are more likely to raise funding successfully. Our findings provide implications for policymakers, ICO fundraisers, and investors on the importance of white paper quality.