Linguistic errors and investment decisions: the case of ICO white papers

[en] 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. The negative impact of language errors is stronger when ICO white papers are (1) written in native English-speaking countries and (2) 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

Disciplines :

Finance

Author, co-author :

Thewissen, Jennifer

Thewissen, James

Torsin, Wouter ; Université de Liège - ULiège > HEC Recherche > HEC Recherche: Financial Management for the Future

Arslan-Ayaydin, Özgür

Language :

English

Title :

Linguistic errors and investment decisions: the case of ICO white papers

Publication date :

2022

Journal title :

European Journal of Finance

ISSN :

1351-847X

eISSN :

1466-4364

Publisher :

Taylor and Francis, Abingdon, United Kingdom

Peer reviewed :

Peer Reviewed verified by ORBi

Available on ORBi :

since 27 May 2022

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2 (2 by ULiège)

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