Abstract
Equity crowdfunding has grown exponentially in the United States since the passage of the JOBS Act in 2013, yet it continues to be an area that is relatively unexplored in the United States due to the limited availability of data. Given the limited amount of information available to potential investors about these highly risky, early-stage crowdfunding investment opportunities, qualitative factors, such as the sentiment or readability of the language used to describe the campaign, is likely to play an important role in the decision to invest, yet this area has not been explored in the equity crowdfunding literature. My dissertation examines the impact of both the sentiment and readability of the language used in a campaign description as well as an entrepreneur’s engagement with the crowd during a campaign. I first examine the role sentiment, as measured tone, and readability, play in influencing an investor’s decision to invest via equity crowdfunding platforms and whether this ultimately impacts the success of the offering. I employ various logit, Tobit, and beta regressions to determine the impact sentiment and readability play in campaign success.
Further, I examine equity crowdfunding offerings both before and after the passage of Title III of the JOBS Act and the differences in investor motivations for both accredited and non-accredited investors. I find that readability and success have an inverse u-shaped relationship. Further, I find that the use of greater positive tone in the crowdfunding description increases the success of the campaigns for a subset of offerings prior to the passage of Title III only. Second, I examine an entrepreneur’s engagement with the crowd via questions and responses, comments, and testimonials and whether engagement ultimately impacts the success of the offering. I find that these on-platform engagement tactics positively impact the success of the campaign for a subset of offerings after the passage of Title III of the JOBS Act in the United States.