Fundraising policies in cultural and creative industries: public stock market and crowdfunding channels

ABSTRACT

As the economic value of creative industries becomes increasingly prominent to national GDP in numerous countries, how CCI firms can obtain sufficient funds to develop their long-term competitiveness has become critical for policymakers. This study discusses the fundraising policies of CCIs in Taiwan with respect to public stock market and equity crowdfunding channels. Our results indicate that the effects of participation in public stock markets and equity crowdfunding differ according to subindustry type and firm size. Digital content companies outperform media and arts & design companies with higher market value, sales, and net income; and large-sized CCI companies benefit more from improvements in export and net income relative to small- and medium-sized CCI companies. The analysis also reveals that some CCI entrepreneurs should be subjected to increased inspection because of the relaxed registration requirement. This study suggests that policymakers could make appropriate adjustments to fundraising policies to enhance their support of CCIs.

KEYWORDS:

• Cultural and creative industries (CCIs)
• fundraising
• public stock market
• equity crowdfunding
• long-term capital

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. This study classifies CCI companies into large-, medium-, and small- sized companies according to two criteria. The first criterion is Article 2 of the Standards for Identifying Small and Medium-sized Enterprises, which is established by the Ministry of Economics of Taiwan and defines registered companies with a capital of less than US$3.33 million (NT$100 million) as small-sized companies. The second criterion is the requirement imposed by the TWSE that allows CCI companies with capital greater US$10 million (NT$300 million) to register with the TWSE. Therefore, we divide the registered companies into three categories, namely small-sized companies (capital of less than US$3.33 million [NT$100 million]), medium-sized companies (capital of between US$3.33 million [NT$100 million] and US$10 million [NT$300 million]), and large-sized companies (capital greater than US$10 million [NT$300 million]).

2. Based on Article 3 of the Development of the Cultural and Creative Industries Act, cultural and creative industries consist of the following industries (Liou and Yang 2018): (1) visual arts, (2) performing arts, (3) cultural assets, (4) crafts, (5) film, (6) broadcast and TV, (7) publishing, (8) advertising, (9) product design, (10) visual design, (11) branding and fashion, (12) architecture, (13) digital content, (14) creative life such as tourist factories and farms, and (15) pop music.

In the present study, we classify the 15 industries into three subindustry categories for brevity:

(A) The digital content category includes (13) digital entertainment (games, software, and the Internet), somatosensory technology (augmented and virtual reality), and digital learning;

(B) The media category includes (5), (6), (7), (8), and (15);

(C) The art and design category includes (1), (2), (3), (4), (9), (10), (11), (12), and (14).

3. According to the Taiwan Cultural and Creative Annual Report (Ministry of Culture 2019), exports accounted for 9.23%, 9.45%, 9.42%, 10.30%, 10.31%, and 10.00% of annual revenue in 2013, 2014, 2015, 2016, 2017, and 2018, respectively, with the average being approximately 9.78%.

4. If a start-up company receives an ‘innovative and creative opinion letter’ or ‘recommendation letter’ from a security company or the competent authority, or if it provides financial statements that are audited by certified accountants and indicate an operating income of more than US$1.67 million (NT$50 million), the company passes the first-stage examination and proceeds directly to the second-stage examination.

5. The data resources used in the present study are as follows: the Taiwan Economic Journal (TEJ) databank (https://www.finasia.biz/), Market Observation Post System (MOPS; https://mops.twse.com.tw/mops/web/index), GISA Market Observation Post System (GISA MOPS; https://mops.twse.com.tw/server-java/gotc/gotc_index), and GISA Ongoing Capital Raising Information page (https://dsp.tpex.org.tw/web/gisa/fundraising_before_gisa.php).

6. The USD/TWD exchange rate for each year is the average of the 12-month exchange rates determined according to the spot selling rate announced by the Bank of Taiwan at the end of each month. The average exchange rates for 2012, 2013, 2014, 2015, 2016, 2017, and 2018 were 29.54, 29.78, 30.43, 31.82, 32.28, 30.35, and 30.20, respectively.

Additional information

Funding

This work was supported by the National Yunlin University of Science & Technology [#110T02].

Notes on contributors

Shu-Ching Chou

Shu-Ching Chou is a professor, Department of Finance, National Yunlin University of Science and Technology (NYUST). Research interests: Corporate governance, Corporate finance, Financial statement analysis, Financial decision-making. Experience: Dean of the Doctoral Program in Industrial Management at NYUST, Dean of Finance department at NYUST, U.S. Certified Public Accountant, Senior supervisor auditor of KPMG, Taiwan.

Yu-Hsiu Cheng

Yu-Hsiu Cheng is a PhD candidate and instructor in Finance department at National Yunlin University of Science & Technology.

Dina Yeni Martia

Dina Yeni Martia is a PhD candidate in Finance department at National Yunlin University of Science & Technology and an instructor in Accounting Department at Politeknik Negeri Semarang.