Prof. Dr. Lars Hornuf

Articles in Refereed Journals

Hornuf, Lars; Schilling, Tobias; Schwienbacher, Armin (2022). The Relevance of Investor Rights in Equity Crowdfunding, Journal of Corporate Finance 77. DOI

Hornuf, Lars; Kück, Theresa; Schwienbacher, Armin (2021). Initial Coin Offerings Information Disclosure and Fraud, Small Business Economics, 58 (4), 1741-1759. DOI

Göthner, Maximilian; Hornuf, Lars; Regner, Tobias (2021). Protecting Investors in Equity Crowdfunding: An Empirical Analysis of the Small Investor Protection Act, Technological Forecasting and Social Change 162. DOI

• During the past decade, equity crowdfunding (ECF) has emerged as an alternative funding channel for startup firms. In Germany, the Small Investor Protection Act became binding in July 2015, with the legislative goal to protect investors engaging in this new asset class. Since then, investors pledging more than 1,000 EUR now must self-report their income and wealth. Investing more than 10,000 EUR in a single ECF issuer is only possible through a corporate entity. We examine how the Small Investor Protection Act has affected investor behavior at Companisto, Germany's largest ECF portal for startup firms. The results show that after the new law became binding, sophisticated investors invest less on average while casual investors invest more. Moreover, the signaling capacity of large investments has disappeared.

Hornuf, Lars; Klus, Milan F.; Lohwasser, Todor S.; Schwienbacher, Armin (2020). How Do Banks Interact with Fintechs?, Small Business Economics, 57 (3), 1505-1526. DOI

• The increasing pervasiveness of technology-driven firms that offer financial services has led to growing pressure on traditional banks to modernize their core business activities and services. Many banks tackle the challenges of digitalization by cooperating with startup firms that offer technology-driven financial services and novel service packages (fintechs). In this article, we examine which banks typically collaborate with fintechs, how intensely they do so, and which form of alliance they prefer. Using hand-collected data covering the largest banks from Canada, France, Germany, and the United Kingdom, we provide detailed evidence on the different forms of alliances occurring in practice. We show that banks are significantly more likely to form alliances with fintechs when they pursue a well-defined digital strategy and/or employ a chief digital officer. Moreover, in line with incomplete contract theory, we find that banks more frequently invest in small fintechs but often build product-related collaborations with larger fintechs.
• Also published as: CESifo Working Paper No. 7170

Hornuf, Lars; Brandl, Barbara (2020). Where Did Fintechs Come From, and Where Do They Go? The Transformation of the Financial Industry in Germany After Digitalization, Frontiers in Artificial Intelligence (Artificial Intelligence in Finance), 3. DOI

• The digitalization of financial services opened a window for new players in the financial industry. These start-ups take on tasks and functions previously reserved for banks, such as lending, payments, or investment. In this article, we trace the transformation of the industry after digitalization. By using data on FinTech formations in Germany, we provide first evidence that entrepreneurial dynamics in the FinTech sector are not so much driven by technology as by the educational and business background of the founders. Furthermore, we investigate the reactions of traditional banks to the emergence of these start-ups. In contrast with other emerging industries such as biotechnology, a network analysis shows that FinTechs have mostly engaged in strategic partnerships and only a few banks have acquired or obtained a financial interest in a FinTech. We explain the restraint of traditional banks to fully endorse the new possibilities of digitalized financial services with the characteristics of the technology itself and with the postponed fundamental decisions of banks to modernize their IT infrastructure.
• Also published at SSRN

Block, Joern H.; Groh, Alexander; Hornuf, Lars; Vanacker, Tom; Vismara, Silvio (2020). The Entrepreneurial Finance Markets of the Future: A Comparison of Crowdfunding and Initial Coin Offerings, Small Business Economics, 57 (2), 865-882. DOI

• Entrepreneurial finance markets are in a dynamic state. New market niches and players have developed and continue to emerge. The rules of the game and the methods for receiving financial backing have changed in many ways. This editorial and the special issue of Small Business Economics focus on crowdfunding (CF) and initial coin offerings (ICOs), which are two distinct but important entrepreneurial finance market segments of the future. Although the two market segments initially appear to be similar, we identify differences between them. Our comparison focuses on the stakeholders, microstructures, regulatory environments, and development of the markets. We conclude with suggestions for future ICO and CF research.

Dorfleitner, Gregor; Hornuf, Lars; Wannenmacher, Lena (2020). Der deutsche FinTech-Markt im Jahr 2020, Ifo Schnelldienst, 2020 (8), 33-40.

• Die FinTech-Branche ist ein dynamisch wachsender Markt, auf dem sich beständig neue Geschäftsmodelle und Segmente herausbilden. Mit den neuen Akteuren sind erhebliche Möglichkeiten, aber auch signifikante Risiken für den Finanzmarkt verbunden, weshalb eine regelmäßige Untersuchung der Marktgrößen von Bedeutung ist. Vor vier Jahren wurden im Auftrag des Bundesministeriums der Finanzen erstmals Daten zu den Marktvolumina deutscher FinTech-Unternehmen für den Zeitraum von 2007 bis 2015 erhoben und eine Prognose für die zukünftige Marktentwicklung erstellt. Im vorliegenden Aufsatz werden die Marktvolumina bis zum Jahr 2019 fortgeschrieben und die ursprünglichen Prognosen auf ihren Vorhersagegehalt überprüft. Gegenüber den ursprünglichen Prognosen haben einzelne Teilsegmente die Prognose des realistischen Szenarios deutlich übertroffen (Crowdlending, Robo-Advice, Anlage und Banking), während andere Teilsegmente bislang hinter den Erwartungen zurückblieben (spenden- und gegenleistungsbasiertes Crowdfunding, Crowdinvesting, Factoring).
• https://www.ifo.de/DocDL/sd-2020-08-dorfleitner-hornuf-wannenmacher-deutscher-fin-tech-markt.pdf

Hainz, Christa; Hornuf, Lars; Nagel, Lisa; Reiter, Sarah; Stenzhorn, Eliza (2019). Die Befreiungsvorschriften des Kleinanlegerschutzgesetzes: Eine Follow-up-Studie, Ifo-Schnelldienst, 72 (9), 26-37.

Hornuf, Lars; Mohamed, Abdul; Schwienbacher, Armin (2019). The Economic Impact of Forming a European Company, Journal of Common Market Studies, 57 (4), 659-674. DOI

• Also published in: Oxford Business Law Blog

Hainz, Christa; Hornuf, Lars; Nagel, Lisa; Reiter, Sarah; Stenzhorn, Eliza (2019). Exemption Provisions of the German Small Investor Protection Act: A Follow-up Study, CESifo DICE Report, 17 (2), 41-51.

Hornuf, Lars; Klöhn, Lars (2019). Do Judges Hate Speculators?, European Journal of Law and Economics, 47 (2), 147-169. DOI

• Historically, people have often expressed negative feelings toward speculators, a
  sentiment that might have even been reinforced since the latest financial crisis, dur-
  ing which taxpayer money was warranted or spent to bail out reckless investors. In
  this paper, we conjecture that judges may also have anti-speculator sentiment, which
  might affect their professional decision making. We asked 123 professional law-
  yers and 247 law students in Germany this question, and they clearly predicted that
  judges would have an anti-speculator bias. However, in an actual behavioral study,
  185 judges did not exhibit such bias. In another sample of 170 professional lawyers,
  we found weak support for an anti-speculator bias. This evidence suggests that an
  independent audience may actually perceive unbiased judgments as biased. While
  the literature usually suggests that a communication problem exists between lawyers
  and non-lawyers (i.e. between judges and the general public), we find that this prob-
  lem can also exist within the legal community.
• Also published in: The Romanian Judges' Forum Review, 1/2019, 26 - 45

Hornuf, Lars (2019). Libra: Eine Währung, die die Welt (nicht) braucht? - Bigtechs und digitale Zahlungssysteme, Ifo-Schnelldienst, 72 (17), 9-12.

Haddad, Christian; Hornuf, Lars (2019). The Emergence of the Global Fintech Market: Economic and Technological Determinants, Small Business Economics, 53 (1), 81-105. DOI

• We investigate the economic and technological determinants inducing entrepreneurs to establish ventures with the purpose of reinventing financial technology (fintech). We find that countries witness more fintech startup formations when the latest technology is readily available, capital markets are well-developed, and people have more mobile telephone subscriptions. Furthermore, the available labor force has a positive impact on the development of this new market segment. Finally, the more sound the financial system, the lower the number of fintech startups in a country. Overall, the evidence suggests that fintech startup formation need not be left to chance, but active policies can influence the emergence of this new sector.

Hornuf, Lars; Klöhn, Lars (2019). Do Judges Hate Speculators?, The Romanian Judges' Forum Review, 1/2019, 26-45.

• Also published in: European Journal of Law and Economics, 47 (2), 147 - 169

Ariely, Dan; Garcia-Rada, Ximena; Gödker, Katrin; Hornuf, Lars; Mann, Heather (2019). The Impact of Two Different Economic Systems on Dishonesty, European Journal of Political Economy, 59 (C), 179-195. DOI

• Using an artefactual field experiment, this paper tests the long-term implications of living in a specific economic system on individual dishonesty. By comparing cheating behaviour across individuals from the former socialist East of Germany with those of the capitalist West of Germany, we examine behavioural differences within a single country. We find long-term implications of living in a specific economic system for individual dishonesty when social interactions are possible: participants with an East German background cheated significantly more on an abstract die-rolling task than those with a West German background, but only when exposed to the enduring system of former West Germany. Moreover, our results indicate that the longer individuals had experienced socialist East Germany, the more likely they were to cheat on the behavioural task.

Hornuf, Lars; Schmitt, Matthias; Stenzhorn, Eliza (2018). Equity Crowdfunding in Germany and the UK: Follow-up Funding and Firm Failure, Corporate Governance: An International Review, 26 (5), 331-354. DOI

• Today, startups often obtain financing via the Internet through many small contributions of non-sophisticated investors. Yet little is known about whether these startups can ultimately
  build enduring businesses. In this article, we hand-collected data from 14 different equity
  crowdfunding (ECF) portals and 426 firms that ran at least one successful ECF campaign in
  Germany or the United Kingdom. We empirically analyze different factors affecting
  follow-up funding and firm failure. The findings show that German firms that received ECF
  stood a higher chance of obtaining follow-up funding through business angels or venture
  capitalists, but also had a higher likelihood of failure. The number of senior managers,
  subsequent successful ECF campaigns, and the number of venture capital investors all had
  a positive impact on obtaining post-campaign financing, while firm age had a negative
  impact. Subsequent successful ECF campaigns were significant predictors decreasing firm
  failure.
• Also published as: Max Planck Institute for Innovation & Competition Research Paper No. 17-09

Dorfleitner, Gregor; Hornuf, Lars; Weber, Martina (2018). Dynamics of Investor Communication in Equity Crowdfunding, Electronic Markets, 28 (4), 523-540. DOI

• In crowdfunding, start-ups can voluntarily communicate with their investors by posting updates. We investigate whether start-ups strategically use updates, which were previously shown to increase investments. To this end, we use hand-collected data of 751 updates and 39,036 investment decisions from the two major German equity crowdfunding portals Seedmatch and Companisto. We find evidence for strategic communication behavior of startups during an equity crowdfunding campaign. During the funding period, start-ups post updates with linguistic devices that enhance the group identity and the group cohesion. Furthermore, the probability of an update during the funding period increases with a strong competition of other contemporary crowdfunding campaigns.

Hornuf, Lars; Klöhn, Lars; Schilling, Tobias (2018). Financial Contracting in Crowdinvesting: Lessons from the German Market, German Law Journal, 19 (3), 509-578.

• The present Article aims to shed light on the question whether crowdinvesting regulation should favor a specific legal form or contract type for crowdinvesting. To this end, it analyzes the conditions which legal forms and contract types must fulfill to be used in crowdinvesting. As crowdinvesting in Germany benefits from a high degree of contractual freedom, the Article gives an overview not only of the types but also of the contents of crowdinvesting contracts that are in use in Germany and traces how they have evolved. Based on a sample of 81% of all crowd financing in the German market, it evaluates 255 crowdinvesting campaigns held on 18 different platforms in the period from August 1, 2011 to December 31, 2015.
• Also published in Oxford Business Law Blog 2016

Hornuf, Lars; Schwienbacher, Armin (2018). Internet-Based Entrepreneurial Finance: Lessons from Germany, California Management Review, 60 (2), 150-175. DOI

• The Internet-based crowdinvesting market in Europe has developed significantly since its start in 2007 and has become an alternative source of finance for entrepreneurs to sell securities through the Internet to small investors. This market evidences a great variety in platform design and contract forms used by crowdinvesting platforms. By analyzing more detailed, hand-collected data on the complete set of successful and unsuccessful crowdinvesting campaigns run in Germany, this article tests whether different platform and contractual mechanisms affect crowd participation. The results show that crowd participation is largest when the minimum ticket size is small, the crowd is pooled in a financial vehicle, and the crowd is offered investments in the form of profit-participating loans. Moreover, the very same mechanisms increase the chances of achieving successful campaigns and raising a larger amount.
• Also published at SSRN under the title: The Emergence of Crowdinvesting in Europe: With an In-Depth Analysis of the German Market
• Also published as LMU Discussion Paper 43 under the title: The Emergence of Crowdinvesting in Europe

Block, Jörn; Hornuf, Lars; Moritz, Alexandra (2018). Which Updates During an Equity Crowdfunding Campaign Increase Crowd Participation?, Small Business Economics, 50 (1), 3-27. DOI

• Start-ups often post updates during equity crowdfunding campaigns. Yet, little is known about the effects of such updates on funding success. We investigate this question using hand-collected data from 71 funding campaigns on two German equity crowdfunding portals. Using a combination of qualitative and quantitative empirical research techniques, we find that posting an update has a significant positive effect on the number of investments by the crowd and the investment amount collected by the start-up. This effect does not occur immediately in its entirety but is lagged by a few days. The positive effect increases with the number of words of the update. Distinguishing by the content of the update, we find that the positive effect can be attributed to updates about new funding and business developments as well as updates that inform about promotional campaigns run by the start-up. Updates about the start-up team, the business model, cooperation projects, and product developments do not show meaningful effects. Our paper contributes to the literature about the effects of information disclosure on equity crowdfunding success and helps start-ups to design effective and successful equity crowdfunding campaigns.

Engert, Andreas; Hornuf, Lars (2018). Market Standards in Financial Contracting: The Euro’s Effect on Debt Securities, Journal of International Money and Finance, 85, 145-162. DOI

• The introduction of the Euro ushered in a rise to dominance of English contract law in European debt securities. Corporate issuers in the Euro zone chose English law significantly more often than a control group of other European countries. The Euro effect on choice of law is particularly strong for debt securities in local markets that, arguably, were most affected by the Euro. The Euro effect is not explained by differences in the suitability of English law compared to other laws, a change in issuer composition or debt securities types, and the greater market share of British and American underwriters. We argue that increased standardization benefits (network effects) from a boost in cross-border investment provide the best account of why English law conquered the European debt securities market.

Hornuf, Lars; Schwienbacher, Armin (2018). Market Mechanisms and Funding Dynamics in Equity Crowdfunding, Journal of Corporate Finance, 50, 556-574. DOI

• Equity crowdfunding is a new form of entrepreneurial finance, in which investors do not receive perks or engage in pre-purchase of the product, but rather participate in the future cash flows of a firm. In this paper, we analyze what determines individual investment decisions in this new financial market. One important factor that may influence the behavior of investors is the way the portal allocates securities. We use unique data from four German equity crowdfunding portals to examine how the allocation mechanism affects funding dynamics. In contrast with the crowdfunding campaigns on Kickstarter, on which the typical pattern of project support is U shaped, we find that equity crowdfunding dynamics are L shaped under a first-come, first-served mechanism and U shaped under a second-price auction. The evidence also shows that investors base their decisions on information provided by the entrepreneur in the form of updates as well as by the investment behavior and comments of other crowd investors.

Hainz, Christa; Hornuf, Lars; Klöhn, Lars; Brauer, Björn; Ehrenfried, Felix; Engelmann, Gerrit (2017). Die Befreiungsvorschriften des Kleinanlegerschutzgesetzes, Ifo-Schnelldienst, 70 (6), 26-35.

• http://www.wiso-net.de/document/IFOS__3D9D3471C5D8859AB5EEC3BF0DAAC4DE
• Also published as ifo Forschungsbericht 78

Hornuf, Lars; Neuenkirch, Matthias (2017). Pricing Shares in Equity Crowdfunding, Small Business Economics, 48 (4), 795-811. DOI

• We analyze the pricing of cash flow rights in start-up companies using a unique data set of 44 equity crowdfunding campaigns. Our sample consists of 499 backers who invested during the period from November 6, 2011, to March 25, 2014, on the German equity crowdfunding portal Innovestment. In contrast with all other European equity crowdfunding portals, Innovestment runs a multi-unit second-price auction in which backers themselves can specify the price of an investment ticket. We exploit this unique auction mechanism to analyze backers’ willingness to pay for cash flow rights. We find that campaign characteristics, investor sophistication, progress in funding, herding, and stock market volatility influence backers’ willingness to pay in an economically meaningful manner, while geographic distance, learning effects, and sniping at the end of an auction have no effect.

Hornuf, Lars; Schwienbacher, Armin (2017). Should Securities Regulation Promote Equity Crowdfunding?, Small Business Economics, 49 (3), 579-593. DOI

• In this paper, we show that too strong investor protection may harm small firms and entrepreneurial initiatives, which contrasts with the traditional ‘law & finance’ view that stronger investor protection is better. This situation is particularly relevant in crowdinvesting, which refers to a recent financial innovation originating on the Internet and targets small, innovative firms. In many jurisdictions, securities regulation offers exemptions to prospectus and registration requirements. We provide an into-depth discussion of recent regulatory reforms in different countries and discuss how they may impact crowdinvesting. Building on a theoretical framework, we show that optimal regulation depends on the availability of alternative early-stage financing such as venture capital and angel finance. Finally, we offer exploratory portal-level evidence from Germany on the impact of securities regulation on small business finance.
• Also published at SSRN

Klöhn, Lars; Hornuf, Lars; Schilling, Tobias (2016). Financial Contracting in Crowdinvesting: Lessons from the German Market, Oxford Business Law Blog 2016.

• https://www.law.ox.ac.uk/business-law-blog/blog/2016/10/financial-contracting-crowdinvesting-lessons-german-market
• Also published in German Law Journal, 19(3), 509-578

Mann, Heather; Garcia-Rada, Ximena; Hornuf, Lars; Tafurt, Juan (2016). What Deters Crime? Comparing the Effectiveness of Legal, Social, and Internal Sanctions Across Countries, Frontiers in Psychology (Cognitive Science), 85 (7). DOI

Mann, Heather; Garcia-Rada, Ximena; Hornuf, Lars; Tafurt, Juan; Ariely, Dan (2016). Cut from the Same Cloth: Similarly Dishonest Individuals Across Countries, Journal of Cross-Cultural Psychology, 47 (6), 858-874.

Klöhn, Lars; Hornuf, Lars; Schilling, Tobias (2016). Crowdinvesting-Verträge - Inhalt, Entwicklung und praktische Bedeutung, Zeitschrift für Bankrecht und Bankwirtschaft, 27 (3), 142-178.

Klöhn, Lars; Hornuf, Lars; Schilling, Tobias (2016). The Regulation of Crowdfunding in the German Small Investor Protection Act: Content, Consequences, Critique, Suggestions, European Company Law, 13 (2), 56-66.

• The German Bundestag has adopted the Small Investor Protection Act on 23 April 2015, which will enter into force in the coming weeks. By this Act the German legislator establishes for the first time – among other things – a regulation of the German crowdfunding market. This article describes the content of the act as relevant to crowdfunding, identifies its probable consequences, and examines the most important rules with respect to their regulatory effects. The authors conclude that despite some modifications that have been made in the course of the legislative process there still is an urgent need of improvement regarding some provisions.
• Also published at SSRN

Klöhn, Lars; Hornuf, Lars; Schilling, Tobias (2015). Reprint of: "The Regulation of Crowdfunding in the German Small Investor Protection Act: Content, Consequences, Critique, Suggestions", Rivista del Diritto Societario, 2015 (4), 767-788.

Hornuf, Lars; Reps, Markus; Schäferling, Stefan (2015). Covenants in European Investment-Grade Corporate Bonds, Capital Markets Law Journal, 10 (3), 345-361.

Hornuf, Lars; Voigt, Stefan (2015). Analyzing Preliminary References as the Powerbase of the European Court of Justice, European Journal of Law and Economics, 39 (2), 287-311. DOI

• The European Court of Justice (ECJ) is a very powerful court compared to other international courts and even national courts of last resort. Observers almost unanimously agree that it is the preliminary references procedure that made the ECJ the powerful court it is today. In this paper, we analyze the determinants that lead national courts to use the procedure. We add to previous studies by constructing a comprehensive panel dataset (1982–2008), including more potentially relevant explanatory variables and by testing for the robustness of previous results. In addition to confirming the relevance of variables previously found significant, we identify a number of additional determinants, including the relevance of agriculture to a country, corporate tax rate, familiarity with EU law, and tenure of democracy.
• SSRN - Also published as CesIfo Working Paper No. 3769 - Category 2: Public Choice under the title: Preliminary References - Analyzing the Determinants that Made the ECJ the Powerful Court It Is

Klöhn, Lars; Hornuf, Lars (2015). Die Regelung des Crowdfunding im Regierungsentwurf des Kleinanlegerschutzgesetzes: Inhalt, Auswirkungen, Kritik, Änderungsvorschläge, Der Betrieb, 68 (1), 47-53.

Eidenmüller, Horst; Engert, Andreas; Hornuf, Lars (2015). Where Do Firms Issue Debt? An Empirical Analysis of Issuer Location and Regulatory Competition in the European Corporate Debt Market, International Review of Law and Economics, 41, 103-115. DOI

• In this article, we study the choice of issuer location and regulatory competition in the European corporate debt market. We find that, in absolute terms, Germany has by far the highest outflow of debt issues, while the Netherlands, the UK, Luxembourg and Ireland see the most inflows (in that order). We use a panel gravity model to investigate country specific factors attracting foreign subsidiaries as issuer. The data clearly support the prediction that the locational choice is positively influenced by a low withholding tax rate. There is also some evidence that corporate tax rates play a role. We do not find support for creditor protection rules in bankruptcy as a driver of cross-border debt securities issues. Hence, countries who wish to attract issuers are well-advised to reduce their withholding tax rates – creditor rights seem not to matter.
• Also published at SSRN as ECGI - Finance Working Paper No. 292/2010

Hornuf, Lars; Haas, Georg (2014). Regulating Fraud in Financial Markets: Can Behavioural Designs Prevent Future Criminal Offences?, Journal of Risk Management in Financial Institutions, 7 (2), 192-201.

• This article explores the anatomy of three recent financial scandals and investigates how the legal system has responded to them. Furthermore, it analyses whether behavioural designs can prevent future criminal offenses. The article comes to the conclusion that the social as well as the physical environment can diminish the human propensity to commit a fraud. Moreover, misconduct was often made attractive to fraudsters by means of external rewards. Reforming performance incentives might therefore be an efficient measure to reduce deception in financial markets.
• Also published at SSRN

Braun, Reiner; Eidenmüller, Horst; Engert, Andreas; Hornuf, Lars (2013). Does Charter Competition Foster Entrepreneurship? A Difference-in-Difference Approach to European Company Law Reforms, Journal of Common Market Studies, 51 (3), 399-415. DOI

• We study how company law reforms, particularly the reduction or abolition of minimum capital requirements, in various European jurisdictions affect the decision of entrepreneurs to incorporate by means of a private limited liability company (LLC). Since the landmark rulings of the European Court of Justice (ECJ) in the years 1999, 2002 and 2003, entrepreneurs in the European Union (EU) have been able to choose the country of incorporation independently of their real seat. As a result, the proliferation of the UK private company limited by shares has posed a competitive threat to many European legislators. We analyze whether the reforms adopted in Spain, France, Hungary, Germany and Poland have promoted the popularity of domestic legal forms and encouraged entrepreneurship more generally. Using a difference-in-difference approach, we record a strong impact in both respects, especially if the minimum capital requirement was reduced or abolished.
• Also published at SSRN as ECGI - Finance Working Paper No. 308/2011

Hornuf, Lars; Reps, Markus; Schäferling, Stefan (2013). Covenants in europäischen Investment-grade-Unternehmensanleihen, Zeitschrift für Bankrecht und Bankwirtschaft, 26 (3), 202-210.

• Covenants are a type of contractual protection for creditors in debt financing. They are used in bond contracts to control the issuer’s management activity and to attenuate conflicting goals existing between shareholders and bondholders. The article provides an overview of covenants and the way they function against the background of financial theory. It further provides detailed data on how often covenants are actually used in corporate bonds issued predominantly by European issuers. Examining the rights of fixed-income investors vis-à-vis bond issuers contributes to the increasingly significant and growing research on debt governance, which addresses, inter alia, the optimal drafting of bond contracts.
• SSRN - English version: Covenants in European Investment-Grade Corporate Bonds

Engert, Andreas; Hornuf, Lars (2013). Market Standards in Public Sector Debt Contracting, CESifo DICE Report, 11 (3), 16-20.

Braun, Reiner; Eidenmüller, Horst; Engert, Andreas; Hornuf, Lars (2013). Unternehmensgründungen unter dem Einfluss des Wettbewerbs der Gesellschaftsrechte, Zeitschrift für das gesamte Handelsrecht und Wirtschaftsrecht, 177 (1), 131-148.

Klöhn, Lars; Hornuf, Lars (2012). Crowdinvesting in Deutschland – Markt, Rechtslage und Regulierungsperspektiven, Zeitschrift für Bankrecht und Bankwirtschaft, 24 (4), 237-266.

Eidenmüller, Horst; Hornuf, Lars; Reps, Markus (2012). Contracting Employee Involvement: An Analysis of Bargaining over Employee Involvement Rules for a Societas Europaea, Journal of Corporate Law Studies, 12 (2), 201-235.

Engel, Martin; Hornuf, Lars (2012). Mediation als Verbraucherschutz – oder Verbraucherschutz vor Mediation?, Neue Zeitschrift für Schiedsverfahren, 10 (1), 26-32.

Hornuf, Lars; Zanconato, Ulrich (2011). Material Adverse Change Klauseln in deutschen Übernahmeangeboten: Eine rechtstatsächliche Untersuchung, Zeitschrift für Bankrecht und Bankwirtschaft, 2011 (5), 412-416.

Engel, Martin; Hornuf, Lars (2011). Vexierbild Richtermediation – Eine Studie zur Wahrnehmung verschiedener Mediationsformen in Deutschland, Zeitschrift für Zivilprozeß, 2011 (4), 505-518.

Engel, Martin; Hornuf, Lars (2011). Das deutsche Glücksspielmonopol – Eine ordnungspolitische und rechtsökonomische Analyse, Zeitschrift für Wirtschaftspolitik, 60 (1), 86-109.

Eidenmüller, Horst; Engert, Andreas; Hornuf, Lars (2010). How Does the Market React to the Societas Europaea?, European Business Organization Law Review, 11 (1), 35-50.

• When Council Regulation (EC) No 2157/2001 on the Statute for a European Company (Societas Europaea - SE) became effective on 8 October 2004, it offered publicly traded companies, for the first time, a choice between competing company laws, namely the national law of the company’s home state and the law of the supranational SE. Using an event study methodology, we analyse a unique dataset of publicly traded firms that have announced to re-incorporate under the SE Regulation. We find the re-incorporation decision to have a positive impact on firms’ stock market value. The abnormal returns associated with re-incorporating as an SE increase over the years, which we interpret as the result of declining legal uncertainty and a rising reputational value of the SE corporate form.
• Also published as ECGI Law Working Paper No. 127/2009 under the title "The Societas Europaea: Good News for European Firms"

Eidenmüller, Horst; Engert, Andreas; Hornuf, Lars (2009). Vom Wert der Wahlfreiheit: Eine empirische Analyse der Societas Europaea als Rechtsformalternative, Die Aktiengesellschaft, 54 (23), 845-855.

Eidenmüller, Horst; Engert, Andreas; Hornuf, Lars (2009). Incorporating Under European Law: The Societas Europaea as a Vehicle for Legal Arbitrage, European Business Organization Law Review, 10 (1), 1-33. DOI

• After a slow start, the European Company (Societas Europaea, SE) has become increasingly popular. Beside documenting the growth of this new company type, we examine whether firms choose to incorporate in the SE corporate form because they engage in 'legal arbitrage' by exploiting differences in legal rules between jurisdictions. We specify a number of hypotheses on particular legal arbitrage motives. To validate our hypotheses, we use a broad telephone survey among SE users in Germany as well as a simple country-level regression model based on a unique, hand-collected dataset on SE incorporations. We find strong evidence that firms use the SE to mitigate the effect of mandatory co-determination rules. Establishing a one-tier board structure (in jurisdictions that impose a two-tier structure on their national public companies) and taking advantage of the SE's mobility for tax purposes also seem to be driving SE formations. By contrast, our analysis fails to support the suggestion that firms use the SE to shop for the most favourable national company law to fill the gaps in the SE Regulation.
• SSRN

Eidenmüller, Horst; Engert, Andreas; Hornuf, Lars (2008). Die Societas Europaea: Empirische Bestandsaufnahme und Entwicklungslinien einer neuen Rechtsform, Die Aktiengesellschaft, 53 (20), 721-730.

Gluch, Erich; Hornuf, Lars (2007). Europäischer Nichtwohnhochbau weiterhin auf Wachstumskurs, Ifo-Schnelldienst, 60 (5), 31-36.

Gluch, Erich; Hornuf, Lars (2007). Auswirkungen der Globalisierung auf die Bauwirtschaft, Ifo-Schnelldienst, 60 (3), 41-49.

Edited Books, Collected Editions

Cumming, Douglas; Hornuf, Lars (eds.) (2018). The Economics of Crowdfunding: Startups, Portals and Investor Behavior. London: Palgrave Macmillan.

• This book focuses on various types of crowdfunding and the lessons learned from academic research. Crowdfunding, a new and important source of financing for entrepreneurs, fills a funding gap that was traditionally difficult to close. Chapters from expert contributors define and carefully evaluate the various market segments: donation-based and reward-based crowdfunding, crowdinvesting and crowdlending. They further provide an assessment of startups, market structure, as well as backers and investors for each segment. Attention is given to the theoretical and empirical findings from the recent economics and finance literature. Furthermore, the authors evaluate relevant regulatory efforts in several jurisdictions. This book will appeal to finance, entrepreneurship and legal scholars as well as entrepreneurs and platform operators.

Contributions to Collected Editions

Dorfleitner, Gregor; Hornuf, Lars (2021). Allgemeiner Marktüberblick, in: Florian Möslein, Sebastian Omlor (eds.), FinTech Handbuch: Digitalisierung, Recht, Finanzen, 2. ed., 25-43. München: C.H. Beck.

Dorfleitner, Gregor; Hornuf, Lars (2021). Marktüberblick, in: Thorsten Voß (ed.), Recht der FinTechs (De Gruyter Praxishandbuch), Berlin: De Gruyter, forthcoming.

Dorfleitner, Gregor; Hornuf, Lars; Schmitt, Matthias; Weber, Martina (2019). Allgemeiner Marktüberblick, in: Florian Möslein, Sebastian Omlor (eds.), FinTech Handbuch: Digitalisierung, Recht, Finanzen, 21-39. München: C.H. Beck.

Gödker, Katrin; Hornuf, Lars (2019). Regulatory Competition, in: Alain Marciano, Giovanni Battista Ramello (eds.), Encyclopedia of Law and Economics, Volume 3 (O-Z) (Springer Reference), 1787-1795. New York: Springer. DOI

• Regulatory competition describes the activity of private or public lawmakers who intend to produce novel or alter current legislation in response to competitive pressure from other private or public lawmakers. In this chapter, we provide an overview of the legal arbitrage tactics of various entities, which are a necessary, though not sufficient, condition for regulatory competition. Moreover, we investigate whether and how lawmakers respond to these endeavors by adapting their national corporate, insolvency, capital markets, and environmental law as well as product standards.

Braun, Susanne; Hornuf, Lars (2018). Authentic Leadership and Followers’ Cheating Behaviour: A Laboratory Experiment from a Self-Concept Maintenance Perspective, in: Dorianne Cotter-Lockard (ed.), Authentic Leadership and Followership: International Perspectives (Palgrave Studies in Leadership and Followership ), 215-244. London: Palgrave Macmillan. DOI

• Extensive evidence shows that when given the opportunity, people cheat for monetary rewards, but only to the extent that they can keep a positive self-concept. In this study, we investigate various factors that may influence the degree to which people can keep their positive self-concept while cheating for monetary gains. We find that authentic leadership, gender, cheating norm, experience of cheating, and expectations of others’ cheating behavior have no effect on participants’ spontaneous dishonesty on an abstract task. Therefore, reducing people’s cheating behavior might be a long-term project for the management of fraudulent organizations and more difficult than might be expected.

Hornuf, Lars; Lindner, Julia (2016). The End of Regulatory Competition in European Company Law?, in: Martina Eckardt, Christian Schubel (eds.), Wettbewerb der Gesellschaftsrechtsordnungen in Ostmitteleuropa? (Andrássy Studien zur Europaforschung, 16), 117-138. Baden-Baden: Nomos.

• In this article, we analyze regulatory competition in company law in the European Union (EU). By examining the empirical evidence, we conclude that regulatory competition, which is triggered by legal arbitrage and the competitive pressure exerted by national lawmakers, has run out of steam in the EU. Unlike in the United States, both language barriers and double accounting obligations for branches have hampered entrepreneurs from engaging in legal arbitrage. As a result, a necessary precondition for horizontal regulatory competition is absent. Furthermore, vertical regulatory competition is not on the agenda of national legislators, as the Statute for a European Company is largely based on national company laws. Revising the national company law therefore improves the supranational competitor as well and destroys the incentives for national legislators to engage in vertical regulatory competition.
• SSRN - Also published as Andrássy Working Paper Series No. 33

Hornuf, Lars; Schwienbacher, Armin (2016). Crowdinvesting – Angel Investing for the Masses?, in: Colin Mason, Hans Landström (eds.), Handbook of Research on Business Angels, 381-398. Cheltenham UK; Northampton, MA: Edward Elgar.

• This book chapter reviews crowdinvesting, which is sometimes referred to as equity crowdfunding. It specifically aims at answering the following question: Is crowdinvesting transforming the crowd into small business angels? In order to answer this question, we review the securities regulation in different jurisdictions and compare crowdinvesting practices in these countries with angel finance. Finally, we offer insights into different avenues for future research. One pertains to the question whether crowdinvesting will complement or substitute angel finance. While this issue cannot be answered unambiguously, we expect that in many cases, crowdinvesting may become a complementary source of funding to angel finance rather than a substitute. This is because crowdinvestors fill funding gaps at the lower end of the market or may at times co-invest with professional investors. In other cases, crowdinvestors may compete with business angels for the same investments since average funding volumes can be similar.
• SSRN

Hornuf, Lars (2015). Equity Premium Puzzle, in: Morris Altman (ed.), Real World Decision Making: An Encyclopedia of Behavioral Economics, 123-124. Santa Barbara: ABC-CLIO.

Eidenmüller, Horst; Hornuf, Lars; Reps, Markus (2013). Contracting Employee Involvement: An Analysis of Bargaining over Employee Involvement Rules for a Societas Europaea, in: Horst Eidenmüller (ed.), Regulatory Competition in Contract Law and Dispute Resolution, 155-186. München: C.H.Beck.

• Following a slow start, the European Company (Societas Europaea – SE) has become a popular legal form amongst European firms. It is rendered attractive by corporate governance features such as the contractual freedom of capital and labor to design a firm-specific employee involvement regime. By analyzing what has been settled for in such agreements, we investigate whether national mandatory employee involvement rules are efficient and which factors impede firm-specific bargained-for solutions.
• Also published at SSRN as ECGI - Law Working Paper No. 185/2012

Eidenmüller, Horst; Engert, Andreas; Hornuf, Lars (2011). Europäischer Rechtswettbewerb bei der Wahl des Emissionsstandorts für Schuldtitel: eine empirische Analyse, in: Peter Behrens, Thomas Eger, Hans-Bernd Schäfer (eds.), Ökonomische Analyse des Europarechts – Beiträge zum XII. Travemünder Symposium zur ökonomischen Analyse des Rechts, 233-274. Tübingen: Mohr Siebeck.

Eidenmüller, Horst; Engert, Andreas; Hornuf, Lars (2010). How Does the Market React to the Societas Europaea?, in: Ulf Bernitz, Wolf-Georg Ringe (eds.), Company Law and Economic Protectionism – New Challenges for European Integration, 134-148. Oxford: Oxford University Press.

Eidenmüller, Horst; Engert, Andreas; Hornuf, Lars (2009). Incorporating Under European Law: The Societas Europaea as a Vehicle for Legal Arbitrage, in: Alessio M. Pacces (ed.), The Law and Economics of Corporate Governance, 82-116. Cheltenham: Edward Elgar.

Further Publications, Press Articles, Interviews

Hornuf, Lars; Schilling, Tobias; Schwienbacher, Armin (2020). The Relevance of Investor Rights in Equity Crowdfunding, Oxford Business Law Blog 2020.

• https://www.law.ox.ac.uk/business-law-blog/blog/2020/04/relevance-investor-rights-equity-crowdfunding

Hornuf, Lars; Dorfleitner, Gregor (2020). FinTech and Data Privacy in Germany, Oxford Business Law Blog 2020.

• https://www.law.ox.ac.uk/business-law-blog/blog/2020/02/fintech-and-data-privacy-germany

Hornuf, Lars; Kück, Theresa; Schwienbacher, Armin (2020). Initial Coin Offerings, Information Disclosure, and Fraud, Oxford Business Law Blog 2020.

• https://www.law.ox.ac.uk/business-law-blog/blog/2020/01/initial-coin-offerings-information-disclosure-and-fraud

Hornuf, Lars; Dorfleitner, Gregor (2020). FinTech and Data Privacy in Germany, Machine Lawyering 2020.

Hornuf, Lars; Lohwasser, Todor; Klus, Milan; Schwienbacher, Armin (2020). How Do Banks Interact With Fintechs? Forms of Alliances and Their Impact on Bank Value, Machine Lawyering 2020.

Hornuf, Lars; Schilling, Tobias; Schwienbacher, Armin (2020). The Relevance of Investor Rights in Equity Crowdfunding, Machine Lawyering 2020.

Hornuf, Lars (2019). Eine Bank kann auch Facebook heißen, Weser Kurier 04.07.2019.

Hainz, Christa; Hornuf, Lars; Klöhn, Lars; Brauer, Björn; Ehrenfried, Felix; Engelmann, Gerrit (2017). Exemptions Featured in the 2015 German Small Investor Protection Act, CESifo DICE Report, 15 (3), 35-42.

• https://www.cesifo-group.de/DocDL/dice-report-2017-3-hainz-hornuf-kloehn-brauer-ehrenfried-engelmann-october.pdf

Hornuf, Lars; Haddad, Christian (2017). The Emergence of the Global Fintech Market: Economic and Technological Determinants, Oxford Business Law Blog 2017.

• https://www.law.ox.ac.uk/business-law-blog/blog/2017/01/emergence-global-fintech-market-economic-and-technological

Dorfleitner, Gregor; Hornuf, Lars; Schmitt, Matthias; Weber, Martina (2016). FinTech-Markt in Deutschland - Abschlussbericht 17. Oktober 2016, 2016.

• German version

Hornuf, Lars; Moritz, Alexandra (2016). Crowdinvesting: Wenn professionelle Investoren merken, Wow, das läuft, steigen sie ebenfalls ein - Interview, EDITION F 2016 06.05.2016.

Hornuf, Lars; Schmitt, Matthias (2016). Success and Failure in Equity Crowdfunding, CESifo DICE Report, 14 (2), 16-22.

Hainz, Christa; Hornuf, Lars (2016). Crowdinvesting, CESifo DICE Report, 14 (1), 67-69.

• http://www.cesifo-group.de/ifoHome/publications/docbase/details.html?docId=19204342

Hornuf, Lars; Mohamed, Abdul; Schwienbacher, Armin (2016). The Economic Impact of Forming a European Company, Oxford Business Law Blog 2016.

• https://www.law.ox.ac.uk/business-law-blog/blog/2016/10/economic-impact-forming-european-company

Hornuf, Lars; Gabor, Barbara (2015). Regulatory Competition in the Internal Market: Comparing Models for Corporate Law, Securities Law and Competition Law, European Journal of Law and Economics, 40 (1), 179-182.

Tzur Bitan, Dana; Müller, Maria Christina; Keren, Shlomit; Krieger, Israel; Hornuf, Lars (2015). War Within, War Outside: A Psychoanalytic Account of Delusional Themes in Germany and Israel During the Twentieth Century, Journal of the American Psychoanalytic Association, 63 (1), NP1-NP7.

Hornuf, Lars (2014). Braucht Deutschland ein Crowdinvesting Gesetz?, VentureCapital Magazin, (4), 58-59.

Klöhn, Lars; Hornuf, Lars (2014). Ein sicherer Rechtsrahmen für das Crowdinvesting, Der Betrieb, 67 (14), 1.

Hornuf, Lars (2014). Warum Deutschland (k)ein Crowdinvesting-Gesetz braucht.

Hornuf, Lars (2014). Bleibt Deutschland Spitzenreiter bei der internetbasierten Finanzierung von Start-up-Unternehmen?, in: iRights.Lab, Philipp Otto (eds.), Das Netz – Jahresrückblick Netzpolitik 2014-2015. Berlin: iRights.media, 96-97.

Hornuf, Lars; Klöhn, Lars (2013). Crowdinvesting und Portfoliodiversifizierung – Eine rechtsökonomische Analyse, VentureCapital Magazin, (2), 34-35.

Hornuf, Lars (2013). Comment on Theodore Eisenberg und Geoffrey Miller: The English vs. the American Rule on Who Pays Attorney fees: An Empirical Study of Publicly-Held Companies’ Contracts, in: Horst Eidenmüller (ed.), Regulatory Competition in Contract Law and Dispute Resolution. München: C.H.Beck, 497-498.

Eidenmüller, Horst; Engert, Andreas; Hornuf, Lars (2009). Warum unterstellen sich Unternehmen europäischem Recht? Ein erster empirischer Befund, Finanzplatz-Report, (5), 20-21.

Hornuf, Lars; Britschkat, Günter (2008). Studie über die Auswirkungen des Glücksspielstaatsvertrages zum Lotterie- und Sportwettmarkt auf die deutsche Volkswirtschaft, Gutachten für die MKW Wirtschaftsforschung GmbH.

Monographies

Hainz, Christa; Hornuf, Lars (2019). Praxiserfahrungen mit den Befreiungsvorschriften des Kleinanlegerschutzgesetzes: Eine aktuelle Bestandsaufnahme (ifo Forschungsbericht, 102). München: ifo Institut.

• https://www.ifo.de/DocDL/ifo_Forschungsberichte_102_2019_Kleinanlegerschutzgesetz.pdf

Dorfleitner, Gregor; Hornuf, Lars (2019). FinTech and Data Privacy in Germany. An Empirical Analysis with Policy Recommendations. Heidelberg: Springer.

• This book examines the FinTech revolution from a data privacy perspective. It analyzes key players on the FinTech market and the developments in various market segments. Particular attention is paid to an empirical analysis of the privacy statements of 505 German FinTech firms and how they were adapted after the General Data Protection Regulation (GDPR) entered into effect in May 2018. The analysis also includes 38 expert interviews with relevant stakeholders from supervisory and regulatory authorities, the financial and FinTech industry, leading consulting firms and consumer protection agencies. By adopting this approach, the book identifies key regulatory needs, offers a valuable asset for practitioners and academics alike, and shares intriguing insights for lawyers, economists and everyone interested in FinTech and data privacy.
• German edition

Dorfleitner, Gregor; Hornuf, Lars (2019). FinTech und Datenschutz - Eine empirische Untersuchung mit Empfehlungen für Politik und Praxis. Wiesbaden: Springer Gabler.

• English edition

Hainz, Christa; Hornuf, Lars; Klöhn, Lars (2017). Praxiserfahrungen mit den Befreiungsvorschriften des Kleinanlegerschutzgesetzes (ifo Forschungsbericht, 78). München: ifo Institut.

• Dieser Forschungsbericht untersucht die Auswirkungen der im Sommer 2015 eingeführten Befreiungsvorschriften des Kleinanlegerschutzgesetzes. Durch eine stärkere Regulierung soll das Kleinanlegerschutzgesetz für mehr Transparenz für Anlegerinnen und Anleger auf dem grauen Kapitalmarkt sorgen. Das Gesetz beinhaltet jedoch auch Ausnahmeregelungen. Diese entbinden sowohl Unternehmen, die sich über Crowdinvesting-Plattform finanzieren, als auch soziale, gemeinnützige und kirchliche Projekte von der Pflicht einer Prospekterstellung bei dem Angebot von Vermögensanlagen. Grundlage der Untersuchung dieser Ausnahmeregelungen ist die Crowdinvesting-Datenbank, eine Befragung unter sozialen und gemeinnützigen Organisation sowie Expertengespräche. Zusammenfassend lassen sich rund ein Jahr nach Einführung des Kleinanlegerschutzgesetzes keine starken Effekte für den Markt für Schwarmfinanzierungen in Deutschland erkennen. Die von uns analysierten Daten zeigen auch, dass sich das Anlageverhalten durch die neu eingeführte Pflicht zur Selbstauskunft über das Einkommen und Vermögen der Investierenden nicht verändert hat. Allerdings haben sich die bei Schwarmfinanzierungen verwendeten Vermögensanlagen in den letzten Jahren weg von stillen Beteiligungen und hin zu partiarischen Darlehen und Nachrangdarlehen entwickelt. Im Bereich sozialer und gemeinnütziger Projekte finden die geschaffenen Ausnahmeregelungen so gut wie keine Anwendung, da andere Regelungen eine wesentlich einfachere Entbindung von der Prospektpflicht ermöglichen.
• This study investigates the effects of exemption provisions within the Small Investor Protection Act that was introduced in July 2015. By increasing the regulatory obligations for issuers, the Small Investor Protection Act should lead to a higher level of transparency for investors in the so called “grey capital market”. However, the act does include exemptions from certain regulatory obligations. Crowdinvesting-platforms, social, charitable and ecclesiastic projects are not obliged to publish a prospectus for the offering of an investment instrument. The investigation into the effects of these exemption rules is based on a crowdinvesting-database, a survey of social and charitable organizations and interviews with experts. In short, the effects of this act and its exemptions one year after its introduction are negligible for the market of crowdinvesting in Germany. Furthermore, the data analysed shows that investment behaviour has not changed as a result of obligations to self-disclose income and wealth on the part of investors. Investment instruments, however, have changed in the crowdinvesting market in recent years from silent partnerships to profit-participating-loans and subordinated loans. Social and charitable projects do not seem to be making use of the newly established exemptions due to the fact that there are other, and in most cases simpler, regulations that release them from the obligation to publish a prospectus.
• http://www.cesifo-group.de/DocDL/ifo_Forschungsberichte_78_2017_Hainz_etal_Kleinanlegerschutzgesetz.pdf
• Also published in: ifo Schnelldienst 70,6 (2017), 26-35

Dorfleitner, Gregor; Hornuf, Lars; Schmitt, Matthias; Weber, Martina (2017). FinTech in Germany. Cham: Springer. DOI

• In this study, conducted on behalf of the Federal Ministry of Finance, we provide the first comprehensive analysis of the German FinTech industry. We quantify the market volume of the industry between 2007 and 2015. On the basis of this data, we also predict the future development of eight segments of the FinTech market, offering detailed forecasts for the years 2020, 2025, and 2035. Moreover, we provide a comprehensive overview of current trends and the drivers of growth that have affected the FinTech industry in the past, as well as the factors that could spur and hinder growth within it in the future.

Hornuf, Lars (2012). Regulatory Competition in European Corporate and Capital Market Law: An Empirical Analysis (European Studies in Law and Economics, 7). Cambridge: Intersentia.

Hornuf, Lars; Britschkat, Günter; Lechner, Robert; Nerb, Gernot (2006). Die Auswirkungen des Bundesverfassungsgerichtsurteils zum Sportwettenmarkt auf die deutsche Volkswirtschaft (ifo Forschungsbericht, 32). München: ifo.

• http://www.cesifo-group.de/DocDL/ifo_Forschungsberichte_32.pdf

Discussion Papers

Hillebrand, Kirsten; Hornuf, Lars (2021). The Social Dilemma of Big Data: Donating Personal Data to Promote Social Welfare, Max Planck Institute for Innovation & Competition Research Paper, No. 21-08.

• When using digital devices and services, individuals provide their personal data to organizations in exchange for gains in various domains of life. Organizations use these data to run technologies such as smart assistants, augmented reality, and robotics. Most often, these organizations seek to make a profit. Individuals can, however, also provide personal data to public databases that enable nonprofit organizations to promote social welfare if sufficient data are contributed. Regulators have therefore called for efficient ways to help the public collectively benefit from its own data. By implementing an online experiment among 1,696 US citizens, we find that individuals would donate their data even when at risk of getting leaked. The willingness to provide personal data depends on the risk level of a data leak but not on a realistic impact of the data on social welfare. Individuals are less willing to donate their data to the private industry than to academia or the government. Finally, individuals are not sensitive to whether the data are processed by a human-supervised or a self-learning smart assistant.
• Also published as: CESifo Working Paper Series No. 8926

Hornuf, Lars; Stenzhorn, Eliza; Vintis, Tim (2020). Are Sustainability-Oriented Investors Different? Evidence from Equity Crowdfunding, CESifo Working Paper, No. 8339.

• In this article, we examine how investor motives affect investment behavior in equity crowdfunding. In particular, we compare the investment behavior of sustainability-oriented with ordinary crowd investors on six leading equity crowdfunding platforms in Austria and Germany and investigate whether they suffer from a default shock that was recently identified by Dorfleitner et al. (2019). In general, we find evidence of a default shock in equity crowdfunding that occurs immediately after the event and if investors experience more than two insolvencies. Moreover, we find that sustainability-oriented investors pledge larger amounts of money and invest in more campaigns than ordinary crowd investors. The results also suggest that sustainability-oriented crowd investors care about non-financial returns, as they react more sensitively after experiencing a default in their equity crowdfunding portfolios, which indicates that they suffer beyond the pure financial loss. These findings contribute to recent literature on equity crowdfunding, socially responsible investing, and how individual investment motives and personal experiences affect investment decisions.
• Available at SSRN

Hornuf, Lars; Fieberg, Christian (2020). Are Characteristics Covariances or Characteristics?, CESifo Working Paper, No. 8377.

• In this article, we shed more light on the covariances versus characteristics debate by investigating the explanatory power of the instrumented principal component analysis (IPCA), recently proposed by Kelly et al. (2019). They conclude that characteristics are covariances because there is no residual return predictability from characteristics above and beyond that in factor loadings. Our findings indicate that there is no residual return predictability from factor loadings above and beyond that in characteristics either. In particular, we find that stock returns are best explained by characteristics (characteristics are characteristics) and that a one-factor IPCA model is sufficient to explain stock risk (characteristics are covariances). We therefore conclude that characteristics are covariances or characteristics, depending on whether the goal is to explain stock returns or risk.
• Available at SSRN

Hornuf, Lars; Kück, Theresa; Schwienbacher, Armin (2019). Initial Coin Offerings, Information Disclosure, and Fraud, CESifo Working Paper, No. 7962.

• We study the extent of fraud in initial coin offerings (ICOs), and whether information disclosure prior to the issuance predicts fraud. We document different types of fraud, and that fraudulent ICOs are on average much larger than the sample average. Issuers that disclose their code on GitHub are more likely to be targeted by phishing and hacker activities, which suggests that there are risks related to disclosing the code. Generally, we find it extremely difficult to predict fraud with the information available at the time of issuance. This calls for the need to install a third-party that certifies the quality of the issuers, such as specialized platforms, or the engagement of institutional investors and venture capital funds that can perform a due diligence and thus verify the quality of the project.
• Available at SSRN

Hornuf, Lars; Schilling, Tobias; Schwienbacher, Armin (2019). Are Equity Crowdfunding Investors Active Investors?, CESifo Working Paper Series, 7884.

• It is often assumed that entrepreneurs retain more control of their venture when they opt for equity crowdfunding as compared to venture capital, notably because crowd investors are passive. We study whether crowd investors are indeed passive by analysing the cash flow and control rights crowd investors receive in equity crowdfunding in Germany, where more flexible contracts are offered than in many other countries. We document that in Germany many of the rights used in venture capital investment contracts are also used in equity crowdfunding contracts. We find that crowd investors are asked to pay higher prices if they receive more cash flow and exit rights, consistent with the fact that these rights are valuable to the crowd. However, these rights have no meaningful economic impact, since they do not affect campaign outcome, the likelihood of
  securing follow-on funding, nor the likelihood of liquidation of the venture. These results are
  inconsistent with control rights theory that predicts positive impacts, in contrast to results
  documented for venture capital contracts. Rather, our results suggest that crowd investors are passive investors whose control rights are ineffective or not exercised.
• Also published as: Max Planck Institute for Innovation & Competition Research Paper No. 19-15

Hornuf, Lars; Jeworrek, Sabrina (2018). Crowdsourced Innovation: How Community Managers Affect Crowd Activities, Max Planck Institute for Innovation & Competition Research Paper, No. 18-16.

• In this study, we investigate whether and to what extent community managers in online collaborative communities can stimulate crowd activities through their engagement. Using a novel data set of 22 large online idea crowdsourcing campaigns, we find that active engagement of community managers positively affects crowd activities in an inverted U-shaped manner. Moreover, we evidence that intellectual stimulation by managers increases community participation, while individual consideration of users has no impact on user activities. Finally, the data reveal that community manager activities that require more effort, such as
• Available at SSRN
• Also published as CESifo Working Paper 7153

Dorfleitner, Gregor; Hornuf, Lars; Weber, Martina (2018). Paralyzed by Shock and Confused by Glut: The Portfolio Formation Behavior of Peer-to-Business Lending Investors, CESifo Working Paper Series, No. 7092.

• We study the investor behavior on a leading peer-to-business lending platform and find evidence of two new investment biases-a default shock bias and a deep market bias. First, we find investors to stop investing in new loans and to cease from diversifying their portfolio after experiencing a loan default. This default shock significantly worsens the risk-return profile of investors' loan portfolios. Second, investors are unable to cope with a glut of loan campaigns. Similar to the default shock bias, investors cease from investing in new loans and consequently underdiversify their portfolios as more loans become available on the platform. Deeper markets also result in a deterioration of investors' risk-return profiles. Third, investment experience on the platform reduces the effect of the deep market bias
• https://www.ifo.de/DocDL/cesifo1_wp7092.pdf
• Also published as: Max Planck Institute for Innovation & Competition Research Series No. 18-11

Dorfleitner, Gregor; Hornuf, Lars; Weber, Martina (2018). Paralyzed by Shock and Confused by Glut: The Portfolio Formation Behavior of Peer-to-Business Lending Investors, Max Planck Institute for Innovation & Competition Research Paper, No. 18-11.

• We study the investor behavior on a leading peer-to-business lending platform and find evidence of two new investment biases-a default shock bias and a deep market bias. First, we find investors to stop investing in new loans and to cease from diversifying their portfolio after experiencing a loan default. This default shock significantly worsens the risk-return profile of investors' loan portfolios. Second, investors are unable to cope with a glut of loan campaigns. Similar to the default shock bias, investors cease from investing in new loans and consequently underdiversify their portfolios as more loans become available on the platform. Deeper markets also result in a deterioration of investors' risk-return profiles. Third, investment experience on the platform reduces the effect of the deep market bias
• Available at SSRN
• Also published as: CESifo Working Paper Series No. 7092

Hornuf, Lars; Schmitt, Matthias; Stenzhorn, Eliza (2018). Equity Crowdfunding in Germany and the UK: Follow-up Funding and Firm Failure, Max Planck Institute for Innovation & Competition Research Paper, No. 17-09.

• Today, startups often obtain financing via the Internet through many small contributions of non-sophisticated investors. Yet little is known about whether these startups can ultimately
  build enduring businesses. In this article, we hand-collected data from 14 different equity
  crowdfunding (ECF) portals and 426 firms that ran at least one successful ECF campaign in
  Germany or the United Kingdom. We empirically analyze different factors affecting
  follow-up funding and firm failure. The findings show that German firms that received ECF
  stood a higher chance of obtaining follow-up funding through business angels or venture
  capitalists, but also had a higher likelihood of failure. The number of senior managers,
  subsequent successful ECF campaigns, and the number of venture capital investors all had
  a positive impact on obtaining post-campaign financing, while firm age had a negative
  impact. Subsequent successful ECF campaigns were significant predictors decreasing firm
  failure.
• Available at SSRN
• Also published in: Corporate Finance: An international Review, Special Issue: New Methods of Entrepreneurial Firm Financing: Fintech, Crowdfunding and Corporate Governance Implications, September 2018, Pages 331-354

Garcia-Rada, Ximena; Mann, Heather E.; Hornuf, Lars; Sohn, Matthias; Tafurt, Juan; Iversen, Edwin S.; Ariely, Dan (2018). The Adaptive Liar: An Interactionist Approach of Multiple Dishonesty Domains, CESifo Working Paper Series, 7215.

• An extant debate in the morality literature centers on whether honesty is a stable and generalizable trait or whether honest behavior in one situation is independent from honest behavior in another situation. However, a third possibility is that tendencies toward dishonesty vary according to life domain. We conducted a cross-cultural study with participants in five countries (China, Colombia, Germany, Portugal, and the United States) to test whether dishonest tendencies vary according to domain. We hypothesized that countries vary in dishonesty according to domain, and that individuals’ tendencies toward dishonesty cluster by domain. Our survey asked participants to report the likelihood of engaging in dishonest behaviors across eight domains of life. The data support both our hypotheses. Our results thus corroborate that dishonesty is driven by the interplay of both individual differences and the circumstances surrounding deception.
• http://www.ifo.de/w/bK6rFncT

Hornuf, Lars; Jeworrek, Sabrina (2018). Crowdsourced Innovation: How Community Managers Affect Crowd Activities, CESifo Working Paper, 7153.

• In this study, we investigate whether and to what extent community managers in online
  collaborative communities can stimulate crowd activities through their engagement. Using a
  novel data set of 22 large online idea crowdsourcing campaigns, we find that active engagement of community managers positively affects crowd activities in an inverted Ushaped manner.
  Moreover, we evidence that intellectual stimulation by managers increases community
  participation, while individual consideration of users has no impact on user activities. Finally,
  the data reveal that community manager activities that require more effort, such as media file uploads instead of simple written comments, have a larger effect on crowd participation.
• https://www.cesifo-group.de/DocDL/cesifo1_wp7153.pdf
• Also published at SSRN as Max Planck Institute for Innovation & Competition Research Paper No. 18-16

Hornuf, Lars; Klus, Milan F.; Lohwasser, Todor S.; Schwienbacher, Armin (2018). How Do Banks Interact with Fintechs? Forms of Alliances and their Impact on Bank Value, CESifo Working Paper, No. 7170.

• The increasing pervasiveness of technology-driven firms that offer banking services has led to a growing pressure on traditional banks to modernize their core business activities. Banks attempt to confront the challenges of digitalization by cooperating with financial technology firms (fintechs) in various forms. In this paper, we investigate the factors that drive banks to form alliances with fintechs. Furthermore, we analyze whether such bank-fintech alliances affect the market valuation of banks. We provide descriptive evidence on the different forms of alliances occurring in practice. Using hand-collected data covering the largest banks from Canada, France, Germany, and the United Kingdom, we show that banks are significantly more likely to form alliances with fintechs when they pursue a well-defined digital strategy and/or employ a Chief Digital Officer. We evidence that markets react more strongly if digital banks rather than traditional banks announce a bank-fintech alliance. Finally, we find that alliances are most often characterized by a product-related collaboration between the bank and the fintech and that banks most often cooperate with fintechs providing payment services.
• http://www.ifo.de/w/3ZhNwtBeE
• Published in: Small Business Economics, Volume 57 (2021), Issue 3, Pages 1505–1526

Brandl, Barbara; Hornuf, Lars (2017). Where Did Fintechs Come from, and Where Do They Go? The Transformation of the Financial Industry in Germany after Digitalization.

• The digitalization of financial services opened a window for new players in the financial industry. These start-ups take on tasks and functions previously reserved for banks, such as lending, payments, or investment. In this article, we trace the transformation of the industry after digitalization. By using data on FinTech formations in Germany, we show that entrepreneurial dynamics in the FinTech sector are not so much driven by technology as by the educational and business background of the founders. Furthermore, we investigate the reactions of traditional banks to the emergence of these start-ups. In contrast with other emerging industries such as biotechnology, a network analysis shows that FinTechs have mostly engaged in strategic partnerships and only a few banks have acquired or obtained a financial interest in a FinTech. We explain the restraint of banks to fully endorse the new possibilities of digitalized financial services with the characteristics of the technology itself and with the postponed fundamental decisions of banks to modernize their IT infrastructure.
• SSRN
• Published in: Frontiers in Artificial Intelligence, Volume 3 (2020), Article 8

Hornuf, Lars; Rieger, Marc Oliver (2017). Can Television Reduce Xenophobia? The Case of East Germany, IAAEU Discussion Paper Series in Economics, No. 02/2017. Trier: Institute for Labour Law and Industrial Relations in the European Union (IAAEU).

• Can television have a mitigating effect on xenophobia? To examine this question, we exploit the fact that individuals in some areas of East Germany – due to their geographic location – could not receive West German television until 1989. We conjecture that individuals who received West German television were exposed more frequently to foreigners and thus have developed less xenophobia than people who were not exposed to those programs. Our results show that regions that could receive West German television were less likely to vote for right-wing parties during the national elections from 1998 to 2013. Only recently, the same regions were also more likely to vote for left-wing parties. Moreover, while counties that hosted more foreigners in 1989 were also more likely to vote for right-wing parties in most elections, we find counties that recently hosted more foreign visitors showed less xenophobia, which is in line with intergroup contact theory.
• https://ideas.repec.org/p/iaa/dpaper/201702.html
• Also published as: CESifo Working Paper No. 6632

Hornuf, Lars; Rieger, Marc Oliver (2017). Can Television Reduce Xenophobia? The Case of East Germany, CESifo Working Paper, No. 6632. Munich: Ifo Institute.

• Can television have a mitigating effect on xenophobia? To examine this question, we exploit the fact that individuals in some areas of East Germany – due to their geographic location – could not receive West German television until 1989. We conjecture that individuals who received West German television were exposed more frequently to foreigners and thus have developed less xenophobia than people who were not exposed to those programs. Our results show that regions that could receive West German television were less likely to vote for right-wing parties during the national elections from 1998 to 2013. Only recently, the same regions were also more likely to vote for left-wing parties. Moreover, while counties that hosted more foreigners in 1989 were also more likely to vote for right-wing parties in most elections, we find counties that recently hosted more foreign visitors showed less xenophobia, which is in line with intergroup contact theory.
• http://www.ifo.de/w/uLp7mA6q
• Also published as: IAAEU Discussion Paper Series in Economics, No. 02/2017

Cumming, Douglas; Hornuf, Lars (2017). Marketplace Lending of SMEs.

• Marketplace lending refers to online platforms facilitating loans from individuals to private small and medium sized enterprises (SMEs). We conjecture that the information conveyed by the platform (ratings) plays a pronounced role in influencing the borrowing success of SMEs, and that more sophisticated financial information and issues of adverse selection are largely irrelevant in these markets. We introduce a first-ever dataset of 414 marketplace loans and track 8,236 online loan-days to test these propositions. The data examined provide strong support for the importance of simple ratings in influencing investor behavior. The data further indicate the importance of competing investment opportunities.
• SSRN

Cumming, Douglas; Hornuf, Lars; Karami, Moein; Schweizer, Denis (2016). Disentangling Crowdfunding from Fraudfunding, Max Planck Institute for Innovation & Competition Research Paper, No. 16-09.

• Using Kickstarter and Indiegogo, the two largest crowdfunding platforms, we conduct an exhaustive search of all fraud cases from 2010 through 2015 that spans nine countries. In line with traditional economic theory, we posit that crowdfunding fraudsters are most concerned with getting caught and with the extent of the expected punishment. However, human nature suggests that maintaining a positive self-concept may be of equal concern. In line with this hypothesis, we present evidence that fraudsters are becoming more recognizable on portals and to the crowd because of several specific characteristics: They are less likely to carry out repeat funding campaigns, they are less likely to have a social media presence, and they are more likely to provide poorly worded and confusing campaign pitches with a greater number of enticements through pledge categories.
• SSRN

Hornuf, Lars; Schmitt, Matthias (2016). Does a Local Bias Exist in Equity Crowdfunding? The Impact of Investor Types and Portal Design, Max Planck Institute for Innovation & Competition Research Paper, No. 16-07.

• We use hand-collected data of 20,460 investment decisions and two distinct portals to analyze whether investors in equity crowdfunding direct their investments and portfolios to local firms. The results suggest that investors exhibit a local bias, even when controlling for family and friends. In addition to the regular crowd, our sample includes angel investors who invest considerable amounts and exhibit a larger local bias. By contrast, well-diversified investors are less likely to suffer from this behavioral anomaly. The data further show that portal design is important for attracting investors more prone to having a local bias. Finally, firms engaging in equity crowdfunding overcome funding barriers by attracting investors at all distances. These findings corroborate regulation targeted to specific investor groups, advise managers of equity crowdfunding portals about their business model, and inform individual investors of their biases.
• SSRN

Mann, Heather; Garcia-Rada, Ximena; Hornuf, Lars; Tafurt, Juan; Iversen, Edwin; Ariely, Dan (2015). Everyday Dishonesty: Towards a Theory of Multiple Honesty Domains.

Ariely, Dan; Garcia-Rada, Ximena; Hornuf, Lars; Mann, Heather (2014). The (True) Legacy of Two Really Existing Economic Systems, Munich Discussion Paper, No. 2014-26.

• By running an experiment among Germans collecting their passports or ID cards in the citizen centers of Berlin, we find that individuals with an East German family background cheat significantly more on an abstract task than those with a West German family background. The longer individuals were exposed to socialism, the more likely they were to cheat on our task. While it was recently argued that markets decay morals (Falk and Szech, 2013), we provide evidence that other political and economic regimes such as socialism might have an even more detrimental effect on individuals’ behavior.
• SSRN