Abstract:
Equity-based crowdfunding (ECF) is a new funding source for Thai startups and small and medium enterprises (SMEs). However, there has been only one ECF fundraising success story in Thailand during the past three years. A mixed-method research approach is employed to investigate the use of accounting and non-accounting information in the Thai ECF setting. The findings show that the most important information is the business model. The majority of participants focus on estimated revenue & cost and estimated cash flow. They pay a great deal of attention to non-accounting information, which is product/service characteristics and market potential. These results can be used by ECF platform operators to address the information asymmetries between fund-seekers and investors. The experimental findings show that individual investors who view mixed-type information are more likely to invest in the ECF campaign than individual investors who view only one set of accounting information or non-accounting information. The present study asserts that two qualitative characteristics of accounting information that influence investment decisions in the ECF environment are relevance and understandability. From the results, it is clear that cognitive errors and emotional bias are the two investor behaviors affecting individual investors’ decision making. These findings imply that although individual investors viewed adequate information, they were negatively influenced by investor bias in their decisions about equity-based crowdfunding. Investment education may be the key to reduce unfavorable investment outcomes resulting from the bias.
