Ipos and Product Quality

Journal of Business

Posted: 12 Oct 2000

See all articles by Neal Stoughton

Neal Stoughton

Vienna University of Economics and Business; Vienna Graduate School of Finance (VGSF)

Kit Pong Wong

University of Hong Kong

Josef Zechner

Vienna University of Economics and Business

Abstract

Given recent public attention paid to high-flying internet IPOs such as Yahoo and Amazon.com, this paper explores a product market motive for going public. We develop a model where consumers look to the stock price to make inferences. The model predicts that only better quality firms will go public. Effects of IPO announcements on rival firms' stock prices are related to inferences of market size and market share. The model also predicts that the likelihood of "hot issue" markets depends on the distribution of market size uncertainty and the degree of network externalities present in consumer preferences.

JEL Classification: G24, G32

Suggested Citation

Stoughton, Neal M. and Wong, Keith Kit Pong and Zechner, Josef, Ipos and Product Quality. Journal of Business. Available at SSRN: https://ssrn.com/abstract=243370

Neal M. Stoughton (Contact Author)

Vienna University of Economics and Business ( email )

Austria

Vienna Graduate School of Finance (VGSF) ( email )

Austria

Keith Kit Pong Wong

University of Hong Kong ( email )

Faculty of Business and Economics
University of Hong Kong
Hong Kong, Nil Nil
Hong Kong
(852) 2859-1044 (Phone)
(852) 2548-1152 (Fax)

Josef Zechner

Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, Wien A-1019
Austria

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
2,714
PlumX Metrics