earticle

영어

Exogenous events such as terrorism, severe virus and natural disasters affect every aspect of our lives. For example, the 9/11 terrorist attack or mass shooting cases in the US bring massive changes in offline businesses, and they also influence online businesses in various aspects. In particular, external shock affects market participants’ emotions and this eventually leads to change the direction and decision-making of market behaviors (Antoniou et al., 2020). Due to the unpredictable and unavoidable characteristics of complete exogeneity, the value of research on the impact of terrorism excludes possible endogeneity issues in the first place. Terrorism not only undermines regional economic development, but also reduces investment leading to have fewer start-up businesses (Irvin et al., 2017). However, most of existing literature focuses country or industry level analysis, and they highlight the impact of large-scale terrorist attacks such as the 2005 London attack and the 9/11 terrorist attack. Also, those studies have not confirmed how domestic terrorist attacks have affected small businesses or startups, especially how the behavior of users within crowdfunding platform changes. In addition, entrepreneurs of startups and small businesses recently use P2P lending site and crowdfunding platform as channels for financing their businesses (Kim and Hann, 2019). Although they predict the expected demand of the market throughout these platforms, newly founded startups and small businesses are unlikely to succeed. One of the reasons why new startups are easily failed is that new entrepreneurs are overconfident. Overconfidence of entrepreneurs is defined as overestimation in this study, which means that overconfident entrepreneurs overestimate their own ability relative to other businesses, or they overestimate their own ability relative to their actual ability (Moore and Healy, 2008). Therefore, our study investigates whether the impact of terrorist attacks influences the psychological status of entrepreneurs and it eventually changes the behaviors within crowdfunding platform. We hypothesize crowdfunding projects’ goal amount is reduced after exposure to terrorist attacks as overconfidence of entrepreneurs, defined as overestimation, is reflected in funding goal for crowdfunding projects. Moreover, we assume that the prediction of fund raises becomes more accurate after terrorist attacks. Thus, we find whether the fundraise success of crowdfunding projects is likely to be increased as the originally targeted goal amount is much closer to the actual amount of funding raised. In order to empirically support, we collected Kickstarter project information from 2009 to 2015 and domestic terror data of the United States. Individual daily project information was aggregated into monthly data by classifying the area where a project is initiated as city level. With respect to terror data, 57 domestic cases, which have more than 5 fatalities, were used for empirical analysis among 1941 cases collected from Gun Violence Archive and Mother Jones.com. After combining city-monthly panel data of crowdfunding project with terror data, we calculated the distance between the place where the projects are initiated and the area where the terror attacks are occurred. Our main independent variable, Exposure to Terror, is a binary variable. We measure it with two dimensions; time and distance as we set the value of 1 if the distance between two points is within a 50-mile radius and when crowdfunding project is created within 1 month after terrorist attacks occurred. Our empirical results suggest that goal amount of crowdfunding campaigns is decreased after exposure to terrorist attacks and the decreasing impact is stronger when the geographical distance between terror attacks occurred and crowdfunding projects initiated is closer. In addition, crowdfunding projects, which are exposed to terrorist attacks, are more likely to successfully reach the funding goal. Thus, over-evaluated goal amount due to overconfidence of entrepreneurs is more accurately adjusted from the impact of terrorist attacks. These findings support that psychological factor of entrepreneurs is reflected in online crowdfunding platform. In order to suggest robust models of our analysis, we continue to conduct a subsampling analysis for selected projects categorized as a group which is not affected by location. Our study broadly contributes to the literature on the impact of exogenous shocks associated with online platform businesses. And we also believe that the findings will have implications by suggesting empirical evidence that terrorism, as an exogenous shock, can be a determinant of startups’ financing.