What information propagates among the public when an initial coin offering (ICO) is initiated? A theory-driven approach

Abstract

Since the popularity of blockchain-based cryptocurrency investments has increased among the public, people have directly purchased cryptocurrency through the cryptocurrency market or joined initial coin offering (ICO) projects. This research explores what informational cues are captured before, during, and after ICO projects that can be considered as signals and a fulfillment of information asymmetry. We adopted two theoretical underpinnings to achieve our research goal - agency and signaling theory. Using information from Twitter, we selected the best-performing ICO project based on the highest return on investment (ROI). Then, we extracted 5,085 tweets related to the selected ICO project. Tweets are categorized by pre-ICO, during and post-ICO, by topic, and dispersion. Analyzing the tweets, we found multiple categories of informational cues for each ICO project. Implications and limitations are discussed.