Equity Allocation in Equity-based Crowd Funding of Startups Based on Lobbying and Reputation Considerations

Main Article Content

Jie Xiong, Ying Du

Abstract

Starting with the problem of information asymmetry in equity-based crowdfunding of startups, this paper analyzes the process of equity-based crowdfunding based on startups, considers the lobbying behavior of startups among lead investors and lead investors’ reputation influence among the following investors, constructs the moral risk model for the participation of startups and lead investors and following investors in equity-based crowdfunding, and demonstrate the optimal equity allocation proportion of startups for their investors. The research shows that when the lobbying degree of the startups or the reputation of the lead investors increase, the minimum capacity standard to satisfy the increase of the optimal equity distribution ratio with the increase of the project income is lower.

Article Details

How to Cite
Jie Xiong, Ying Du. (2021). Equity Allocation in Equity-based Crowd Funding of Startups Based on Lobbying and Reputation Considerations. CONVERTER, 2021(7), 512-523. Retrieved from http://converter-magazine.info/index.php/converter/article/view/530
Section
Articles