Unintended Consequences of Endogenous Prices in Equity Crowdfunding (2021) Job Market Paper

Abstract: In this paper, I build a model where endogenous prices set by entrepreneurs play a central role in determining the success rates of their projects. Individuals with private information about the value of projects choose the appropriate time for investments using equity crowdfunding platforms. When opportunity costs are sufficiently low, investors with sufficiently high valuations promote the project to others by investing early. As opportunity costs increase, entrepreneurs lower prices to make the project more competitive compared to outside options, creating the "pricing effect." I then show that, as a consequence of the pricing effect, increases in opportunity costs improve project success rates during times of high costs. As a result, lowering interest rates can hurt entrepreneurship. Furthermore, if prices remained unchanged, then more valued projects would be more likely to succeed. However, entrepreneurs increase asset prices as they have more valued projects, discouraging individuals to invest. As a result of this increase in asset prices, projects with lower expected values have higher success rates than those with higher expected values.

Non-fundamental Uncertainty in Crypto-assets on Public Blockchains, with Redouane Elkamhi (2020)

Abstract: We extend Kyle (1985) by introducing transparency in trade orders and insiders with single/multiple accounts. We find that splitting orders across time without fully revealing private information requires multiple accounts. Therefore, insiders with a single account trade more aggressively. This heterogeneity in trade behaviors leads to non-monotonicity between volume and fundamental value. The model delivers testable empirical predictions: First, crypto-asset prices with higher absolute total order flows are less informative in the short-term and more likely to have price reversals in the long-term. Second, those in exchanges with larger volatility of liquidity shocks are more informative in the short-term.

The Coinbase Effect in the Cryptocurrency Market: Evidence from an Event Study (2021)

Abstract: Using an event study analysis with 60 cases from the Coinbase exchange over the period 2016 - 2021, I discover that newly included coins into the Coinbase exchange, on average, experience 16.8% gain in its price in the first day following the inclusion announcement. Price appreciation continues in the following days, reaching at the top 22.52% at the fourth day. Price depreciation occurs with a slower rate, taking another 14 days to lose all of the gains seen in the first four days, which shows that "Coinbase effect" is not persistent but leads to short-term bubbles for event coins. Furthermore, decomposing the full-sample by year reveals that Coinbase seems to have the most influential effect on event coins during the year 2020 as the average coin increases 32% in value and half of the coins experience at least 20% price appreciation.