A comparative analysis of the effect of initiative risk statement versus passive risk disclosure on the financing performance of Kickstarter campaigns

Abstract

Extending the theory of perceived risk, this study examines how risk perception, a vital factor in determining investment decisions, comprising both initiative risk statement generated by fundraisers and passive risk disclosure published by backers, influences crowdfunding financing performance. Utilizing a corpus of 126,593 innovative projects from Kickstarter, text analytics is employed to classify risks into controllable and uncontrollable types for an empirical comparative examination. The results show that initiative risk statement negatively impacts financing performance, while passive risk disclosure has a positive influence. Comparatively, passive risk disclosure is superior to initiative risk statement. Uncontrollable (controllable) risks in initiative (passive) risk statement are superior to controllable (uncontrollable) ones. Additionally, a textual cognitive load negatively impacted initiative risk statement and passive risk disclosure. Multiple additional tests, including continuous and discrete measurements of risk, endogeneity correction, and dynamic effects over time, demonstrate the robustness of the results. This study contributes to extending the understanding of online financing risks and providing practical implications for fundraisers and backers in innovative online projects.