Face Value in Equity Crowdfunding: Experimental Evidence on Founder Attractiveness and Retail Investor Judgments
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Ádám Putz
,
Zsófia Vörös
Abstract
Equity crowdfunding (ECF) platforms rely heavily on visual information while operating under pronounced information asymmetries, raising the question of whether founder facial attractiveness functions as a consequential signal in retail investors’ decision making. Drawing on signaling theory and dual-process/thin-slice accounts, we investigate whether and why founder facial attractiveness influences perceived venture success, investment amounts, and expectations of reciprocity. Using an eight-round, incentive-compatible ECF-like task, 229 lay investors evaluated AI-generated founder portraits that were rigorously pretested to manipulate facial attractiveness while holding perceived leadership suitability constant, thereby isolating the effect of attractiveness. Investor decisions were analyzed using generalized estimating equations to account for repeated measures and to control for individual risk propensity and demographic characteristics. Across outcomes, founders depicted as more attractive elicited higher expectations of venture success, larger investment amounts, and stronger expectations of reciprocity. These effects were robust and did not vary as a function of founder or investor sex. The findings advance signaling theory in entrepreneurial finance by demonstrating that non-diagnostic visual cues can systematically shape investor judgments when information is sparse and cognitive elaboration is constrained. In the image-forward, retail-investor context of ECF, facial attractiveness operates as a powerful platform-visible signal despite lacking intrinsic diagnostic value. Practically, the results suggest that platforms should surface diagnostic information earlier and consider debiasing prompts, while founders should complement professional imagery with verifiable signals of quality. More broadly, the study highlights the importance of ethics-by-design approaches to visual presentation in entrepreneurial finance environments involving retail investors.
Funding source: Nemzeti Kutatási, Fejlesztési és Innovációs Alap
Award Identifier / Grant number: TKP2021-NKTA-19
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Funding research: Funding was supported by Nemzeti Kutatási, Fejlesztési és Innovációs Alap (Award No. TKP2021-NKTA-19).
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Data availability statement: The experimental data that support the findings of this study are available in OSF under the link: https://osf.io/enr52/?view_only=4f2efd1bb2eb49e891189c51521ffbff.
Appendix A: Baseline GEE Model Results Assuming an Independent Working Correlation Structure
Results of GEE predicting perceived success.
| Parameters | β | SE | 95 % wald confidence interval | Sig. | ||
|---|---|---|---|---|---|---|
| Lower | Upper | |||||
| Success expectationsa | Bankrupt | −2.440 | 0.3716 | −3.169 | −1.712 | 0.000 |
| Break even | −0.512 | 0.3462 | −1.190 | 0.167 | 0.139 | |
| Double profit | 1.488 | 0.3520 | 0.798 | 2.178 | 0.000 | |
| Non-attractive faceb | −0.465 | 0.0776 | −0.617 | −0.313 | 0.000 | |
| Male facec | −0.075 | 0.0964 | −0.264 | 0.114 | 0.435 | |
| Male participantd | −0.140 | 0.1282 | −0.392 | 0.111 | 0.274 | |
| Age | 0.006 | 0.0044 | −0.003 | 0.014 | 0.201 | |
| SES | 0.069 | 0.0662 | −0.061 | 0.199 | 0.297 | |
| Risk propensity | −0.024 | 0.0217 | −0.067 | 0.019 | 0.269 | |
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aTriple profit reference category. bAttractive face reference category. cFemale face reference category. dFemale participant reference category. SES, socioeconomic status.
Results of the GEE predicting participants’ investments.
| Parameters | β | SE | 95 % wald confidence interval | Sig. | |
|---|---|---|---|---|---|
| Lower | Upper | ||||
| Intercept | 586.268 | 73.3291 | 442.546 | 729.991 | 0.000 |
| Non-attractive facea | −59.432 | 10.8781 | −80.752 | −38.111 | 0.000 |
| Male faceb | −18.295 | 12.5254 | −42.845 | 6.254 | 0.144 |
| Male participantc | −24.921 | 31.3343 | −86.335 | 36.493 | 0.426 |
| Age | 1.516 | 0.9613 | −0.368 | 3.400 | 0.115 |
| SES | 5.398 | 16.0520 | −26.064 | 36.859 | 0.737 |
| Risk propensity | −5.367 | 5.1785 | −15.516 | 4.783 | 0.300 |
| Model QICC | 176136773.84 | ||||
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aAttractive face reference category. bFemale face reference category. cFemale participant reference category. SES, socioeconomic status.
Results of the GEE predicting expected reciprocity.
| Parameters | β | SE | 95 % wald confidence interval | Sig. | ||
|---|---|---|---|---|---|---|
| Lower | Upper | |||||
| Expected profit shareda | 0 | −2.570 | 0.852 | −4.241 | −0.899 | 0.003 |
| 25 % | −0.761 | 0.848 | −2.424 | 0.902 | 0.370 | |
| 50 % | 0.094 | 0.850 | −1.572 | 1.761 | 0.912 | |
| 75 % | 1.474 | 0.859 | −0.209 | 3.157 | 0.086 | |
| Non-attractive faceb | −0.789 | 0.129 | −1.041 | −0.536 | 0.000 | |
| Male facec | 0.261 | 0.081 | 0.102 | 0.420 | 0.001 | |
| Male participantd | 0.306 | 0.217 | −0.119 | 0.731 | 0.158 | |
| Age | 0.007 | 0.008 | −0.008 | 0.022 | 0.364 | |
| SES | −0.040 | 0.143 | −0.321 | 0.240 | 0.778 | |
| Risk propensity | −0.021 | 0.045 | −0.108 | 0.067 | 0.643 | |
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a100 % reference category. bAttractive face reference category. cFemale face reference category. dFemale participant reference category. SES, socioeconomic status.
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