Round Funding Period Heuristics and Kickstarter Campaign Success

Finance Online Seminar2020-06)

Topic: Round Funding Period Heuristics and Kickstarter Campaign Success

Speaker: Jun Yang, Indiana University

Time: Wednesday, 29 April, 10:00-11:30 Beijing Time

Location: Microsoft Teams Online conference room


On Kickstarter, the largest reward-based crowdfunding platform, over 63% of projects have a round-number funding period (i.e., a multiple of 5 days), and 42% choose the default of 30 days. How do entrepreneurs determine their funding period, and how does the funding period choice affect campaign success? We show that on average, a round funding period is associated with a 16.8 percentage point lower probability of campaign success (representing 43.4% of the baseline success rate). The effect is reduced to 6.5 percentage points after controlling for various entrepreneur characteristics, project characteristics, calendar month fixed effects, and the interactive fixed effects of category, state, and year. We further show that entrepreneurs who avoid using a round funding period are more experienced, more careful with operational planning, and exert greater effort to communicate with potential backers. In addition, we show that backers appear to be very careful in selecting projects. They could infer from the round funding period choice an entrepreneur’s lack of execution skills or lack of effort to launch a successful project. Finally, we show that the round funding period choice is associated with a lower probability of post-Kickstarter commercialization for film projects.


Jun Yang is an associate professor of Finance at Kelley School of Business, Indiana University. Her research focuses on corporate finance, corporate governance, executive compensation, and FinTech. Jun’s work on opportunistic managerial behavior in compensation peer benchmarking practice was published by theJournal of Financial Economics(JFE) andReview of Financial Studies. Jun’s current research investigates opportunistic managerial behavior related to executive pensions and various factors that may affect the nature of director independence (e.g., collusive trading between independent directors and the CEO, and corporate charitable donations to independent-director-affiliated charities). Her most recent publication at the JFE shows that in some circumstances managers are able to extract rents through their pension plans. Top executives receive one-time increases in pensionable earnings through higher annual bonuses one year before a plan freeze and one year before retirement. Firm also boost pension payouts by lowering plan discount rates when top executives are eligible to retire with lump-sum benefit distributions. Jun’s work won numerous research awards and was featured byTheWall Street Journal,New York Times,TheWashington Post,Bloomberg,Harvard Law School Forum, andSlate. Jun received her Ph.D. in Finance from Washington University in Saint Louis, and her Master’s and Bachelor’s degrees from Tsinghua University (summa cum laude).


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