Cognitive Processes of Signal Set from Entrepreneurs and the Importance of Herds in Equity Crowdfunding

Daniel Dao; Thang Nguyen; Panagiotis Andrikopoulos

doi:10.1177/10422587261419472

Cognitive Processes of Signal Set from Entrepreneurs and the Importance of Herds in Equity Crowdfunding

Research Centre for Resilient Business and Society

University of Oxford
European University Cyprus

Research output: Contribution to journal › Article › peer-review

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Abstract

Drawing on a theoretical framework associated with the cognitive perspective, we propose that investors will rely on heuristic cognitive processes when signals from entrepreneurs are congruent or imbalanced incongruent. However, when signals are balanced incongruent, investors will engage in systematic cognitive processes that incorporate additional information from the herding behaviour of other investors. We find evidence supporting our hypotheses in a sample of campaigns listed on a UK equity crowdfunding platform. Further analysis employing advanced machine learning techniques reveals that investors engage more in systematic processes when signals from entrepreneurs are in a weak form of balanced incongruence rather than a strong form.

Original language	English
Pages (from-to)	1509-1546
Number of pages	38
Journal	Entrepreneurship Theory and Practice
Volume	50
Issue number	5
Early online date	3 Mar 2026
DOIs	https://doi.org/10.1177/10422587261419472
Publication status	Published - Sept 2026

Bibliographical note

© The Author(s) 2026. This article is distributed under the terms of the Creative Commons Attribution 4.0 License (https://creativecommons.org/licenses/by/4.0/) which permits any use, reproduction and distribution of the work without further permission provided the original work is attributed as specified on the SAGE and Open Access pages (https://us.sagepub.com/en-us/nam/open-access-at-sage).

Funding

The authors received no financial support for the research, authorship, and/or publication of this article.

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 8 Decent Work and Economic Growth
SDG 12 Responsible Consumption and Production

Keywords

Signal incongruence
Cognitive processing
Herding
Equity crowdfunding

ASJC Scopus subject areas

Finance

Themes

Societal and Cultural Resilience

Access to Document

10.1177/10422587261419472Licence: CC BY

AcceptedAccepted author manuscript, 213 KB
Nguyen2026VoRFinal published version, 762 KBLicence: CC BY

Cite this

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abstract = "Drawing on a theoretical framework associated with the cognitive perspective, we propose that investors will rely on heuristic cognitive processes when signals from entrepreneurs are congruent or imbalanced incongruent. However, when signals are balanced incongruent, investors will engage in systematic cognitive processes that incorporate additional information from the herding behaviour of other investors. We find evidence supporting our hypotheses in a sample of campaigns listed on a UK equity crowdfunding platform. Further analysis employing advanced machine learning techniques reveals that investors engage more in systematic processes when signals from entrepreneurs are in a weak form of balanced incongruence rather than a strong form.",

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AU - Nguyen, Thang

AU - Andrikopoulos, Panagiotis

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N2 - Drawing on a theoretical framework associated with the cognitive perspective, we propose that investors will rely on heuristic cognitive processes when signals from entrepreneurs are congruent or imbalanced incongruent. However, when signals are balanced incongruent, investors will engage in systematic cognitive processes that incorporate additional information from the herding behaviour of other investors. We find evidence supporting our hypotheses in a sample of campaigns listed on a UK equity crowdfunding platform. Further analysis employing advanced machine learning techniques reveals that investors engage more in systematic processes when signals from entrepreneurs are in a weak form of balanced incongruence rather than a strong form.

AB - Drawing on a theoretical framework associated with the cognitive perspective, we propose that investors will rely on heuristic cognitive processes when signals from entrepreneurs are congruent or imbalanced incongruent. However, when signals are balanced incongruent, investors will engage in systematic cognitive processes that incorporate additional information from the herding behaviour of other investors. We find evidence supporting our hypotheses in a sample of campaigns listed on a UK equity crowdfunding platform. Further analysis employing advanced machine learning techniques reveals that investors engage more in systematic processes when signals from entrepreneurs are in a weak form of balanced incongruence rather than a strong form.

KW - Signal incongruence

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KW - Herding

KW - Equity crowdfunding

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Cognitive Processes of Signal Set from Entrepreneurs and the Importance of Herds in Equity Crowdfunding

Abstract

Bibliographical note

Funding

UN SDGs

Keywords

ASJC Scopus subject areas

Themes

Access to Document

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Cite this