Should Securities Regulation Promote Crowdinvesting?

Hornuf, Lars und Schwienbacher, Armin (20. März 2014): Should Securities Regulation Promote Crowdinvesting? Münchener Wirtschaftswissenschaftliche Beiträge (VWL) 2014-27

Abstract

In this paper, we show that too strong investor protection may harm small firms and entrepreneurial initiatives, which contrasts with the traditional ‘law & finance’ view that stronger investor protection is better. This situation is particularly relevant in crowdinvesting, which refers to a recent financial innovation originating on the Internet and targets small, innovative firms. In many jurisdictions, securities regulation offers exemptions to prospectus and registration requirements. We provide an into-depth discussion of recent regulatory reforms in different countries and discuss how they may impact crowdinvesting. Building on a theoretical framework, we show that optimal regulation depends on the availability of alternative early-stage financing such as venture capital and angel finance. Finally, we offer exploratory portal-level evidence from Germany on the impact of securities regulation on small business finance.

• Dokumententyp: Paper
• Keywords: crowdinvesting, crowdfunding, securities regulation, investor protection
• Fakultät: Volkswirtschaft ; Volkswirtschaft > Munich Discussion Papers in Economics
• Themengebiete: 300 Sozialwissenschaften > 330 Wirtschaft
• JEL Classification: G20, G18, G38, K22
• Sprache: Englisch

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