Does Geopolitical Risk Matter for the Success of Initial Coin Offerings?

ABSTRACT This study investigates the effect of country‐specific geopolitical risk (GPR) on initial coin offering (ICO) success. The findings of this study reveal a positive relation. A plausible explanation may lie in prospect theory. When losses are more likely to take place, investors are risk‐seeking and may overweight the low probability of hitting a big win in their pursuit of high returns. As a result, they may invest in high GPR ICOs that, in turn, may have a positive effect on their success. High GPR ICOs that employ the know your customer scheme, however, exhibit a lower likelihood of success.