Does soft information in expert ratings curb information asymmetry? Evidence from crowdfunding and early transaction phases of Initial Coin offerings
研究利用首次代币发行评级平台的双重评级系统，分离出专家评级中的软信息，发现其能减少发行方与投资者之间的信息不对称，并帮助预测代币长期表现。
An Initial Coin Offering is the Initial Public Offering of the crypto sector. By issuing crypto tokens in exchange for funds, Initial Coin Offering is a popular way to raise capital for products or services typically associated with cryptocurrencies by issuing crypto tokens in exchange for funds. Initial Coin Offering has gained a lot of attention in the past few years; however, its lack of regulation has raised transparency and investor protection concerns from public agencies. This paper examines the role of soft information in third-party expert ratings and how it can mitigate information asymmetry in the financial markets. Expert ratings normally contain two types of information: hard information – a summary of public, numerically-measured information, and soft information – containing expert insights, rumours, and private conversations. Taking advantage of the special dual-rating system of a leading Initial Coin Offering rating platform, we successfully isolate soft information from expert ratings. We find that soft information reduces information asymmetry between issuers and investors, measured by the amount of raised funds in the crowdfunding phase and the underpricing levels in the early transaction phase. We also test the long-term survival rates and market price trends of issued tokens and conclude that soft information also plays a crucial role for investors in predicting the long-term performance of tokens. A heterogeneity analysis further shows that the soft information provided by expert ratings is more influential in countries or regions with low business environment indices.