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(1 - 6 of 6)
- Title
- Disentangling Crowdfunding from Fraudfunding.
- Creator
- Douglas Cumming, Lars Hornuf, Moein Karami, Denis Schweizer
- Abstract/Description
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Fraud in the reward-based crowdfunding market has been of concern to regulators, but it is arguably of greater importance to the nascent industry itself. Despite its significance for entrepreneurial finance, our knowledge of the occurrence, determinants, and consequences of fraud in this market, as well as the implications for the business ethics literature, remain limited. In this study, we conduct an exhaustive search of all media reports on Kickstarter campaign fraud allegations from 2010...
Show moreFraud in the reward-based crowdfunding market has been of concern to regulators, but it is arguably of greater importance to the nascent industry itself. Despite its significance for entrepreneurial finance, our knowledge of the occurrence, determinants, and consequences of fraud in this market, as well as the implications for the business ethics literature, remain limited. In this study, we conduct an exhaustive search of all media reports on Kickstarter campaign fraud allegations from 2010 through 2015. We then follow up until 2018 to assess the ultimate outcome of each allegedly fraudulent campaign. First, we construct a sample of 193 fraud cases, and categorize them into detected vs. suspected fraud, based on a set of well-defined criteria. Next, using multiple matched samples of non-fraudulent campaigns, we determine which features are associated with a higher probability of fraudulent behavior. Second, we document the short-term negative consequences of possible breaches of trust in the market, using a sample of more than 270,000 crowdfunding campaigns from 2010 through 2018 on Kickstarter. Our results show that crowdfunding projects launched around the public announcement of a late and significant misconduct detection (resulting in suspension) tend to have a lower probability of success, raise less funds, and attract fewer backers.
Show less - Date Issued
- 2021
- PURL
- http://purl.flvc.org/fau/fd/FAUIR000522
- Format
- Document (PDF)
- Title
- Does Venture Capital Backing Improve Disclosure Controls and Procedures? Evidence from Management’s Post‑IPO Disclosures.
- Creator
- Douglas Cumming, Lars Helge Hass, Linda A. Myers, Monika Tarsalewska
- Abstract/Description
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Firm managers make ethical decisions regarding the form and quality of disclosure. Disclosure can have long-term implications for performance, earnings manipulation, and even fraud. We investigate the impact of venture capital (VC) backing on the quality and informativeness of disclosure controls and procedures for newly public companies. We find that these controls and procedures are stronger, as evidenced by fewer material weaknesses in internal control under Section 302 of the Sarbanes...
Show moreFirm managers make ethical decisions regarding the form and quality of disclosure. Disclosure can have long-term implications for performance, earnings manipulation, and even fraud. We investigate the impact of venture capital (VC) backing on the quality and informativeness of disclosure controls and procedures for newly public companies. We find that these controls and procedures are stronger, as evidenced by fewer material weaknesses in internal control under Section 302 of the Sarbanes–Oxley Act, when companies are VC-backed. Moreover, these disclosures are informative and are more likely to be followed by subsequent financial statement restatements than are disclosures made by non-VC-backed IPO companies.
Show less - Date Issued
- 2022
- PURL
- http://purl.flvc.org/fau/fd/FAUIR000523
- Format
- Document (PDF)
- Title
- ESSAYS ON FINANCIAL MARKETS AND CORPORATE POLICIES.
- Creator
- Akter, Maimuna, Cumming, Douglas, Florida Atlantic University, Department of Finance, College of Business
- Abstract/Description
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The recent increase in common ownership makes it imperative to study the impact of common ownership on corporate policies. In this two-essay study, I examine how common owners interact with firms to make decisions and how they moderate the impact of market manipulation on corporate culture. In the first essay, I examine whether firms in the same industry make similar investment and financial policies when their large institutional owners overlap. This relationship is important given the...
Show moreThe recent increase in common ownership makes it imperative to study the impact of common ownership on corporate policies. In this two-essay study, I examine how common owners interact with firms to make decisions and how they moderate the impact of market manipulation on corporate culture. In the first essay, I examine whether firms in the same industry make similar investment and financial policies when their large institutional owners overlap. This relationship is important given the tremendous rise of common institutional owners and their significance on their portfolio firms’ policies. I hypothesize that common institutional owners cause their portfolio firms in the same industry to make similar policies by creating anti-competitive incentives, reducing information asymmetry, and influencing governance.
Show less - Date Issued
- 2023
- PURL
- http://purl.flvc.org/fau/fd/FA00014168
- Subject Headings
- Finance, Corporations—Finance, Corporate culture
- Format
- Document (PDF)
- Title
- LIMITED PARTNER ESG STRATEGIES AND ESG APPROACHES BY PRIVATE EQUITY FUNDS.
- Creator
- Buehler, Robert G., Cumming, Douglas, Florida Atlantic University, Department of Finance, College of Business
- Abstract/Description
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This study utilized environmental, social, and governance (ESG) data to analyze how institutional investors' strategies relate to the approaches of the private equity (PE) funds they invest in. Using limited partner (LP) investor and general partner (GP) PE fund data from Preqin, I created ESG scores for both LP and PE funds. Ordinary least-squares regression showed a significant, positive relationship between LP/GP ESG strategies. However, the relationship became negative and significant...
Show moreThis study utilized environmental, social, and governance (ESG) data to analyze how institutional investors' strategies relate to the approaches of the private equity (PE) funds they invest in. Using limited partner (LP) investor and general partner (GP) PE fund data from Preqin, I created ESG scores for both LP and PE funds. Ordinary least-squares regression showed a significant, positive relationship between LP/GP ESG strategies. However, the relationship became negative and significant when firm-, fund-, and country-level controls were added. This misalignment between statements and action, often called greenwashing, suggests that firms are driven to ESG reporting due to external factors and do not feel accountable for investment decisions that follow strategic disclosures. Investor environmental (E), social (S), and governance (G) strategies had different relationships with GP ESG approaches. Public institutional investors, fund size, and the presence of a civil law system were positive contributing factors to the LP/GP ESG relationship. Fund performance was negatively associated with the relationship. There was also a significant difference in the LP/GP ESG approach between European PE funds versus those in North America. These findings show that E, S, and G factors may be more accurately analyzed separately than as one combined cluster. The findings also show that local conditions influence ESG strategic alignment between LPs and GPs. They suggest policymakers consider unique country-level attributes and differences in fund-level characteristics when attempting to influence ESG disclosure. ESG rating services could consider including factors that measure alignment between investors’ strategic statements and their investment decisions. The results provide valuable information on corporate social responsibility (CSR) in private markets, which has yet to be broadly studied compared to the extensive CSR literature available on public companies.
Show less - Date Issued
- 2023
- PURL
- http://purl.flvc.org/fau/fd/FA00014300
- Subject Headings
- Private equity funds, Limited partnership, Social responsibility of business
- Format
- Document (PDF)
- Title
- ESSAYS ON GOVERNMENT CONTRACTING AND PRIVATE INVESTMENT FIRMS: IMPLICATIONS FOR CORPORATE FINANCE.
- Creator
- Suleymanov, Masim, Cumming, Douglas, Javakhadze, David, Florida Atlantic University, Department of Finance, College of Business
- Abstract/Description
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The modern organization is “a nexus of contracts” among various stakeholders. In this two-essay study, I examine how contracts surrounding entrepreneurial firms, namely contracts with the U.S. government agencies as customers and contracts with venture capital (VC) firms as investors, interact. In the first essay, I examine whether and how the ex-post government contracting activity of portfolio companies affects the performance of VC investments. Prior research establishes the impact of...
Show moreThe modern organization is “a nexus of contracts” among various stakeholders. In this two-essay study, I examine how contracts surrounding entrepreneurial firms, namely contracts with the U.S. government agencies as customers and contracts with venture capital (VC) firms as investors, interact. In the first essay, I examine whether and how the ex-post government contracting activity of portfolio companies affects the performance of VC investments. Prior research establishes the impact of government customers on the contractor's operating performance and information quality. I find that government contracting improves the likelihood of successful exits via initial public offering (IPO) or acquisition and reduces the likelihood of a liquidation. I also find that the suppliers’ bargaining power relative to the government moderates the relationship between government contracting and VC investment exits. The increased suppliers’ bargaining power mitigates the positive relationship between government contracting and the likelihood of IPOs. The impact of government contracting on the likelihood of acquisitions and liquidations is more substantial for suppliers with greater bargaining power. The results are robust for reputable and non-reputable VC firms, alternative model specifications, and adjustments for potential endogeneity.
Show less - Date Issued
- 2022
- PURL
- http://purl.flvc.org/fau/fd/FA00013917
- Subject Headings
- Public contracts, Venture capital, Corporations—Finance
- Format
- Document (PDF)
- Title
- THE EFFECT OF STOCK MANIPULATION AND INSTITUTIONAL OWNERSHIP ON CORPORATE VENTURE CAPITAL INVESTMENTS.
- Creator
- Li, Yuan, Cumming, Douglas, Florida Atlantic University, Department of Finance, College of Business
- Abstract/Description
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My first study proposes that stock price manipulation erodes trust, damages corporate reputation, reorients management towards short-termism, harms entrepreneurial innovation culture, and increases the cost of capital. I tested these ideas by linking stock manipulation data to corporate venture capital data for firms listed on NASDAQ and NYSE. The data indicate CVC investments in entrepreneurial firms are followed by a rise in market manipulation in the short run [-3 months, +3 months], but a...
Show moreMy first study proposes that stock price manipulation erodes trust, damages corporate reputation, reorients management towards short-termism, harms entrepreneurial innovation culture, and increases the cost of capital. I tested these ideas by linking stock manipulation data to corporate venture capital data for firms listed on NASDAQ and NYSE. The data indicate CVC investments in entrepreneurial firms are followed by a rise in market manipulation in the short run [-3 months, +3 months], but a decline thereafter. The data further indicates that stock manipulation harms the ability of CVCs to form investment syndicates and reduces the likelihood of successful IPO and acquisition exits. The hazard rate to IPO is 0.54 for CVC-backed firms that face market manipulation. Overall, the theory and evidence provide insights into how firm's manipulation can damage the effectiveness of their venture capital endeavors, ultimately contributing to sustainable growth and innovation.
Show less - Date Issued
- 2024
- PURL
- http://purl.flvc.org/fau/fd/FA00014451
- Subject Headings
- Venture capital, Investments, Stocks, Finance, Economics
- Format
- Document (PDF)
