Abstract

http://ssrn.com/abstract=1152412
 
 

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Analysis of the Dot-Com Bubble of the 1990s


John J. Morris


Kansas State University

Pervaiz Alam


Kent State University

June 27, 2008


Abstract:     
During the dot-com bubble of the 1990s, equity market valuation was a popular topic for investors, financial analysts and academics. Some questioned whether traditional accounting and financial information had lost its value relevance, as stocks traded at multiples of earnings well in excess of historic levels, leading Alan Greenspan to caution against irrational exuberance. This study examines the relation between market valuation and traditional accounting information before, during and after the bubble. We document a decline in the relation between market value and traditional accounting information during the bubble period followed by an increase after the collapse of the market in 2000. We also examine alternative explanations to the irrational exuberance theory, including the quality of earnings, and the aggressiveness of financial analysts' forecasts, finding weak support for either alternative.

Number of Pages in PDF File: 37

Keywords: New Economy, Value Relevance, Capital Markets, Equity Valuation, Earnings Quality, Analyst Forecast

JEL Classification: D21, E44, G12

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Date posted: June 29, 2008  

Suggested Citation

Morris, John J. and Alam, Pervaiz, Analysis of the Dot-Com Bubble of the 1990s (June 27, 2008). Available at SSRN: http://ssrn.com/abstract=1152412 or http://dx.doi.org/10.2139/ssrn.1152412

Contact Information

John J. Morris (Contact Author)
Kansas State University ( email )
Manhattan, KS 66506-4001
United States
785-532-6185 (Phone)
Pervaiz Alam
Kent State University ( email )
P.O. Box 5190
Kent, OH 44242-0001
United States
330-672-1121 (Phone)
330-672-2548 (Fax)
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