The Role of the Media in the Internet IPO Bubble

51 Pages Posted: 4 Sep 2007

See all articles by Utpal Bhattacharya

Utpal Bhattacharya

HKUST Business School

Xiaoyun Yu

Shanghai Jiao Tong University (SJTU) - Shanghai Advanced Institute of Finance (SAIF); European Corporate Governance Institute (ECGI); National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER); China Academy of Financial Research (CAFR)

Neal Galpin

Monash University - Department of Banking and Finance

Rina Ray

University of Colorado at Denver

Multiple version iconThere are 2 versions of this paper

Abstract

We read all news items that came out between 1996 and 2000 on 458 internet IPOs and a matching sample of 458 non-internet IPOs - a total of 171,488 news items - and classify each news item as good news, neutral news, or bad news. We first document that the media was more positive for internet IPOs in the period of the dramatic rise in share prices, and was more negative for internet IPOs in the period of the dramatic fall in share prices. We then document that media hype is unable to explain the internet bubble: there was a 1646% difference in returns between internet stocks and non-internet stocks from January 1, 1997 through March 24, 2000 (the market peak), and the media can explain only 2.9% of that.

Keywords: Initial public offering, media, internet bubble

JEL Classification: E32, G12, G14, G24, G30

Suggested Citation

Bhattacharya, Utpal and Yu, Xiaoyun and Galpin, Neal E. and Ray, Rina, The Role of the Media in the Internet IPO Bubble. Journal of Financial and Quantitative Analysis (JFQA), Forthcoming, Available at SSRN: https://ssrn.com/abstract=1010744

Utpal Bhattacharya

HKUST Business School ( email )

Clear Water Bay
Kowloon
Hong Kong

Xiaoyun Yu (Contact Author)

Shanghai Jiao Tong University (SJTU) - Shanghai Advanced Institute of Finance (SAIF) ( email )

Shanghai Jiao Tong University
211 West Huaihai Road
Shanghai, 200030
China

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER) ( email )

BIZ 2 Storey 4, 04-05
1 Business Link
Singapore, 117592
Singapore

China Academy of Financial Research (CAFR)

1954 Huashan Road
Shanghai P.R.China, 200030
China

Neal E. Galpin

Monash University - Department of Banking and Finance ( email )

Melbourne
Australia

Rina Ray

University of Colorado at Denver ( email )

Box 173364
1250 14th Street
Denver, CO 80217
United States
303-315-8455 (Phone)

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