The Role of Assurance in Equity Crowdfunding
The Accounting Review

About the paper

This study is based on my 1st-year summer project from the Seminar in "Accounting Research - Financial Markets" with Professor Nicole Thorne Jenkins. I gathered the data manually, developed and presented the complete project at the University of Kentucky Accounting department workshop at the beginning of the 2nd year of the program. 

This project further developed with my coauthors and is accepted for publication in TAR  and I am very grateful for their outstanding contribution to this project.



The SEC requires equity crowdfunding (ECF) companies to provide assured financial statements. Assurance can be provided with certification by management or an audit or review by an independent accountant. We utilize the ECF setting to examine whether voluntary assurance facilitates capital formation. We find that companies that provide either reviewed or audited financial statements during a capital campaign are marginally more likely to raise their target capital. They also raise more funds and attract more investors relative to companies that only provide management-certified financial statements. However, relative to reviews, audits are not associated with a greater likelihood of success in an ECF offering other than attracting more investors. Finally, we find that assurance is indirectly associated with a company's post-ECF survival and its ability to raise future capital. This suggests that assurance at the time of ECF has implications for a company's success beyond ECF.

Cited in the SEC (2020) Final Rule  (page 274) on Facilitating Capital Formation and Expanding Investment Opportunities by Improving Access to Capital in Private Markets,

and featured in Forbes business magazine.

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   Evisa Bogdani
        University of Kentucky
   Monika Causholli
        University of Kentucky
   Robert W. Knechel
        University of Florida

Published in
"The Accounting Review"
online version - March 2021
Forthcoming printed version - March 2022