Spell It Right! The impact of linguistic accuracy on corporate investment decisions: The case Initial Coin Offering whitepapers
(2021) The European Journal of Finance — (2021)
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- Abstract
- Drawing on language expectancy theory, we predict that linguistic errors in ICO white papers negatively impact investors’ willingness to financially contribute to ICO projects. We manually annotate a sample of 546 ICO white papers according to 13 different error subcategories related to spelling and grammar. The error-annotated data are subsequently submitted to regression analyses which confirm that linguistic errors discourage potential investments in ICOs. Specifically, our analyses reveal the presence of “high penalty” vs. “low penalty” errors which result in higher vs. lower financial investment losses for the ICOs. We further find that the negative impact of language errors is stronger for (1) ICOs that are written in native English-speaking countries and (2) ICOs from countries without cryptocurrency regulation. Results from an experiment confirm that this relationship is not driven by the entrepreneur- or investor-specific characteristics. Overall, we highlight that the reader identifies linguistic errors as a major ‘red flag’ that ultimately affects financial decision-making.
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Thewissen, J., Thewissen, J., Torsin, W., & Özgür, A.-A. (2021). Spell It Right! The impact of linguistic accuracy on corporate investment decisions: The case Initial Coin Offering whitepapers. The European Journal of Finance. Submitted. https://hdl.handle.net/2078.5/23133 (Original work published 2021)