Regulation Crowdfunding, enacted in May 2016, is intended to facilitate capital formation in startups and small businesses funded primarily by small investors (Securities and Exchange Commission (SEC), 2016b). This dissertation investigates (1) the risk of fraud in equity crowdfunding offerings and (2) whether investors respond to fraud signals by selecting (rejecting) offers with low (high) fraud risk. Because equity crowdfunding is quite new, no frauds have yet been identified. Therefore, I employ a predictive analytics tool, Benford’s Law, to assess the fraud risk of the offering. I select observable indicators to represent the Fraud Triangle dimensions—incentives, opportunities and rationalization—and test if they predict fraud risk. I also compare offer funding outcomes to my fraud risk assessments to identify if investors’ selections consider fraud risk appropriately. The relaxed auditor assurance and disclosure requirements attracts both honest and dishonest founders, but I find that the risk of fraud is higher in equity crowdfunding offers than in public offerings as reported by other studies. I find that there are several individual fraud indicators and models that explain fraud risk, but these do not predict whether the offer is funded or not (funding outcomes) or the amount that is raised if funded. This dissertation is the first to apply Benford’s Law to equity crowdfunding offers and map fraud attributes to fraud risk and funding outcomes. My dissertation can inform investors, issuers, regulators, intermediaries and practitioners of the high risk of fraud in equity crowdfunding offerings and of several noteworthy fraud indicators. / Business Administration/Accounting
| Identifer | oai:union.ndltd.org:TEMPLE/oai:scholarshare.temple.edu:20.500.12613/2652 |
| Date | January 2019 |
| Creators | Cabarle, Carla |
| Contributors | Basu, Sudipta, 1965-, Krishnan, Jayanthi, Mao, Connie X., Gong, Jing |
| Publisher | Temple University. Libraries |
| Source Sets | Temple University |
| Language | English |
| Detected Language | English |
| Type | Thesis/Dissertation, Text |
| Format | 133 pages |
| Rights | IN COPYRIGHT- This Rights Statement can be used for an Item that is in copyright. Using this statement implies that the organization making this Item available has determined that the Item is in copyright and either is the rights-holder, has obtained permission from the rights-holder(s) to make their Work(s) available, or makes the Item available under an exception or limitation to copyright (including Fair Use) that entitles it to make the Item available., http://rightsstatements.org/vocab/InC/1.0/ |
| Relation | http://dx.doi.org/10.34944/dspace/2634, Theses and Dissertations |
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