Abstract
Utilizing the data collected from 3,266 start-ups¡¯ Business Plans (BPs) in the largest angel investment platform in China, we examine angel investment decisions under condition of extreme uncertainty and information asymmetry. Building on the literature on cultural entrepreneurship and social comparison, we argue that the way entrepreneurs make comparison claims may influence angel investors¡¯ perception of the start-ups¡¯ identity and legitimacy. Our results suggest that distinctiveness comparison (as compared to conformity comparison) is an effective tactic for start-ups to attract angel investment. The positive effect of distinctiveness comparison on angel investment is weakened when a start-up compares itself to great popular established firms, but strengthened when a start-up discloses complete information about itself to potential investors.
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