Topic: Trust in Crowdfunding: Experimental Evidence from a Fundraising Campaign
Speaker: Jun Yang, Professor of Finance, Indiana University Kelly School of Business
Date: March 2, 2022 (Wednesday)
Time: 10:00-11:30
Location: 4-101
Language: English
Abstract:
Despite the importance of trust in determining economic outcomes, little is known about what facilitates or hinders interpersonal trust. Using a randomized field experiment, we examine the role of trust and the determinants of perceived trustworthiness in the context of crowdfunding. The key feature of the experiment involves randomized rotations of the campaign design, which differ in the profile photo, the level of detail in the campaign description, and the update status. Survey participants then independently judge the perceived trustworthiness of the campaign. We find that while posting updates significantly increases perceived the trustworthiness of the campaign and the funds raised, having a more detailed description has little effect. Our follow-up survey reveals that the differential effects are driven primarily by salience. Interestingly, displaying a white or male profile photo improves the trustworthiness score and generates a higher contribution level, which can be explained by white participants’ (and donors’) and male participants’ (and donors’) preferences. Finally, we find that the effects of campaign updates and the profile photo disappear when donors are directly connected to the fundraising team, highlighting the authentication and trust-transmission role of social networks.
About the speaker:
Jun Yang is the Co-Chairperson of Finance, the Director of the Institute for Corporate Governance and 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 the Journal of Financial Economics (JFE) and Review 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. Firms also boost pension payouts by lowering plan discount rates when top executives are eligible to retire with lump-sum benefit distributions.
Winning numerous research awards, Jun's work was featured by The Wall Street Journal, New York Times, The Washington Post, Bloomberg, Harvard Law School Forum, and Slate. 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).
