To Tweet or not to Tweet? The Determinants of Tweeting Activity in Initial Coin Offerings

Our research explores the causes of Twitter activity in highly technological start-ups that finance their activities via initial coin offerings (ICOs). By relying on weekly data of 297 ICOs for the period 2015-2020 (35,459 observations), we examine how major exogenous events affect the number of tweets issued by the start-up. Then, we explore how the community of followers reacts to the tweets. We discover that events external to firms reduce ICOs' tweeting activity. Moreover, our evidence indicates that the followers' reaction is positively related to the tweets issued by the firm and negatively related to major events unrelated to the firm. Interestingly, followers' reaction has an inverted U-shaped relation with the firm's Twitter volume, suggesting that excessive Twitter activity can harm the further dissemination of tweets. Our results, robust to alternative estimation techniques, emphasize the important role of Twitter as an information disseminator, legitimizer, and endorser for highly opaque firms.