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How to free the potential power of the capital market while simultaneously protecting the investors is critical in equity-based crowdfunding. To realize these goals, the purpose of this study was to investigate the value of information disclosure and leader-follower mechanism which have been widely adopted by crowdfunding platforms.

Based on the Elaboration Likelihood Model (ELM), a research framework was developed. Then, the authors conducted an in-depth exploratory empirical study of Dajiatou (www.dajiatou.com) which is a typical equity-based crowdfunding service provider in China. Independent-samples t-test and linear regression were used to uncover the value of project information disclosure and the lead investor in terms of fundraising performance improvement.

First, the quality of entrepreneurial team information, especially the ratio of full-time staff, staff number and enterprise business age, significantly improve fundraising performance. Second, entrepreneurs’ behaviors, including project updates and project video, play important roles in crowdfunding. Third, whether or not the project has a lead investor, leader’s credibility information and his/her advocacy behaviors – percentage of their investment, identity certification, investment experience and comments for projects – are important factors affecting fundraising performance.

The authors are one of the firsts to apply ELM to investigate the effects of diverse information on fundraising performance in equity-based crowdfunding. The value of lead investor which has been ignored in prior research was studied through second-hand data.

First, an equity-based crowdfunding platform should request the entrepreneur to disclose project quality-related information with more details. Second, crowdfunding platforms should set a high qualifications level for lead investor, and limit the lead investor’s committed percentage in a specific project.

This paper extended the research in crowdfunding by uncovering the value of information disclosure and lead investor based on ELM theory.