Events

I investigate firms’ decisions to make disclosure commitments before realizations of signals in the market for initial coin offerings (ICOs). The blockchain technology allows entrepreneurs to make irreversible decisions to disclose their transaction details with investors before transactions take place. Such decisions are coded into computer programs, known as ‘smart contracts,’ which become immutable once deployed on blockchains. I find that ICOs that make disclosure commitments with this technology are more likely to reach fundraising goals and to deliver preliminary products, consistent with a signaling role of disclosure commitments. I also find that transaction volumes on blockchains predict ICO outcomes and that investors punish ICOs with suspicious volumes, e.g., volumes that show signs of automated trading.Collectively, these findings suggest that blockchains can facilitate information sharing in the crowdfunding market.