DP16200 ICO Analysts
|Author(s):||Andreas Barth, Valerie Laturnus, Sasan Mansouri, Alexander F Wagner|
|Publication Date:||May 2021|
|Keyword(s):||Analysts, Asymmetric information, Fintech, Initial Coin Offering (ICO)|
|JEL(s):||D82, D83, G14, G24, L26|
|Programme Areas:||Financial Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=16200|
Initial Coin Offerings (ICOs) provide a clean opportunity and rich data to study the contribution of analysts to the functioning of capital markets. The assessments of freelancing ICO analysts vary in quality and exhibit biases due to the reciprocal interactions of analysts with ICO team members. Ratings predict ICO success, but imperfectly. Even favorably rated ICOs tend to fail when a greater portion of their ratings reciprocate prior ratings. Failure despite strong ratings is also frequent when analysts have a history of optimism, and when reviews strike a particularly positive tone. These findings suggest that information about the track record of analysts and their potentially conflicting activities is valuable to investors.