A Long-Run Performance Perspective on the Technology Bubble
The Financial Review, 2017
47 Pages Posted: 23 Dec 2015 Last revised: 16 Oct 2017
Date Written: October 2, 2017
The events surrounding the stock-price peak of March 2000 are commonly interpreted as the bursting of a technology or Internet bubble, with some researchers pointing out that the pattern could also arise in fundamental models. We inform the debate by studying the long-run performance of Internet and technology stocks from March 2000 onward. Using calendar-time regressions, we do not find conclusive evidence of negative abnormal returns. The results are consistent with a new interpretation of the events; namely, the price drop of the early 2000s was not warranted in light of future cash flows and risk.
Keywords: Internet stocks, tech stocks, bubble, long-run abnormal performance
JEL Classification: G10, G12, G14
Suggested Citation: Suggested Citation