Author: Andreas Barth (Goethe University), Valerie Laturnus (Goethe University), Sasan Mansouri (Goethe University) and Alex Wagner (University of Zurich)
Title: ICO analysts
Abstract: Initial Coin Offerings (ICOs) provide an excellent opportunity to study the role of information frictions for financial markets because regulation is mostly absent. This paper analyzes the role of freelancing human experts (analysts) as potentially valuable intermediaries in ICOs. We document differences in quality of ICO analyst assessments as well as biases due to the reciprocal interactions of ICO analysts with ICO team members. Even though expert ratings are on average predictive for the success of the ICO, investors appear to be aware of the quality of analyst ratings and potential rating biases. Thus, they assign more weight to ratings by high-quality analysts and discount reciprocal ratings. Overall, the findings suggest that, even in this unregulated market with its ``Wild West"" features, market discipline works to some extent and intermediaries can play an important role in mitigating asymmetric information.