Abstract
Outcome of equity crowdfunding campaigns often exceeds original fundraising goals, leading to market inefficiency. This undesirable phenomenon of overfunding garnered little attention in past studies. Synthesizing extant literature on crowdfunding and herding, we identified the initial herd made visible by funding progress indicator as the main cause of overfunding. The impact of the initial herd can be quantified by three dimensions: maturity, intensity, and persistency. We then advance and validate a research model for examining how dimensions of the initial herd affect overfunding in equity crowdfunding. Findings from this study can shed light on plausible remedies for the overfunding issue.
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