Abstract
ABSTRACT We study whether the tone of daily news in mass media as a proxy for market sentiment affects the typical daily pledge amount in reward crowdfunding campaigns. Based on unique data for over 350,000 pledges in reward crowdfunding campaigns from over 2,600 cities in Brazil, we find that market sentiment affects the willingness of backers to make larger pledges. Our unprecedented results reveal that good news induces larger pledges. The effect of tone on pledge amounts is inhibited by the geographic distance between the backer and entrepreneur and is reinforced by income inequality in the backer’s city.
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