ICO vs. equity financing under imperfect, complex and asymmetric information

Miglo, A. (2024) ICO vs. equity financing under imperfect, complex and asymmetric information. FinTech, 3(1), pp. 17-39. (doi: 10.3390/fintech3010002)

Abstract

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.

• Item Type: Articles
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Miglo, Dr Anton
• Authors: Miglo, A.
• College/School: College of Social Sciences > Adam Smith Business School > Accounting and Finance
• Journal Name: FinTech
• Publisher: MDPI
• ISSN: 2674-1032
• ISSN (Online): 2674-1032
• Published Online: 27 December 2023
• Copyright Holders: Copyright © 2023 by the authors
• First Published: First published in FinTech 3(1):17-39
• Publisher Policy: Reproduced under a Creative Commons license