The Price of Modesty: Linguistic Humility as a Credibility Signal in Digital Entrepreneurial Finance

Details

Supervisors

Barrio Herrezuelo, Diego ; Thewissen, James

Faculty

Louvain School of Management

Degree label

Master [120] en sciences de gestion, à finalité spécialisée

Abstract

enThis thesis tests whether linguistic humility in ICO white papers affects fundraising outcomes. The setting is a market without audited financials, underwriters, or analyst coverage one where the white paper is the primary source of information investors use to decide. In such a context, the language of the disclosure carries the burden of credibility. Linguistic humility is measured across five textual dimensions derived from Owens, Johnson and Mitchell (2013): collective pronouns, risk and limitation vocabulary, absence of overconfidence vocabulary, collective attribution, and learning orientation. These dimensions are scored automatically using an NLP pipeline applied to a corpus of 1,137 white papers published between 2017 and 2019, then aggregated into a composite humility index validated against trained human coders (Krippendorff’s α = 0.71). A one-standard-deviation increase in linguistic humility is associated with 14.3% more capital raised approximately $1.79 million at the sample median and with an 8.2 percentage-point increase in the probability of reaching the soft cap. The relationship is concave: marginal returns decline at high levels of expressed humility. The effect is also heterogeneous. Foreign founders gain more from humble language than domestic founders, consistent with a liability- of-foreignness logic. High power-distance cultural contexts dampen the effect. CEO gender does not significantly moderate it. The findings extend signaling theory to a context without professional intermediaries, where disclosure language is the residual credibility signal. They add linguistic humility to the established toolbox of textual-analysis measures in financial disclosure research alongside tone, uncertainty, and readability and identify the boundary conditions under which the signal is amplified or discounted.