IPO Pricing in the Dot-Com Bubble

Ljungqvist, Alexander; Wilhelm, William J.

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IPO Pricing in the Dot-Com Bubble

NYU Working Paper No. FIN-01-061

40 Pages Posted: 3 Nov 2008

See all articles by Alexander Ljungqvist

Alexander Ljungqvist

Centre for Economic Policy Research (CEPR); Swedish House of Finance; European Corporate Governance Institute (ECGI)

William J. Wilhelm

University of Virginia - McIntire School of Commerce

There are 3 versions of this paper

Date Written: February 2002

Abstract

IPO initial returns reached astronomical levels during 1999-2000. We show that the regime shift in initial returns and other elements of pricing behavior can be at least partially accounted for by a variety of marked changes in pre-IPO ownership structure and insider selling behavior over theperiod which reduced key decision-makersâ¬" incentives to control underpricing. After controlling for these changes, there appears to be little special about the 1999-2000 period, aside from the preponderance of internet and high-tech firms going public. Our results suggest that it was firmcharacteristics that were unique during the â¬Sdot-com bubbleâ¬? and that pricing behavior followed from incentives created by these characteristics.

Keywords: Initial public offerings, Underpricing; Intermediation, Internet, Hot issue markets

Suggested Citation: Suggested Citation

Ljungqvist, Alexander and Ljungqvist, Alexander and Wilhelm, William J., IPO Pricing in the Dot-Com Bubble (February 2002). NYU Working Paper No. FIN-01-061, Available at SSRN: https://ssrn.com/abstract=1294606