A Long-Run Performance Perspective on the Technology Bubble

The Financial Review, 2017

47 Pages Posted: 23 Dec 2015 Last revised: 16 Oct 2017

Maximilian Franke

Ulm University

Gunter Löffler

University of Ulm - Department of Mathematics and Economics

Multiple version iconThere are 2 versions of this paper

Date Written: October 2, 2017

Abstract

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

Franke, Maximilian and Löffler, Gunter, A Long-Run Performance Perspective on the Technology Bubble (October 2, 2017). The Financial Review, 2017. Available at SSRN: https://ssrn.com/abstract=2707583 or http://dx.doi.org/10.2139/ssrn.2707583

Maximilian Franke (Contact Author)

Ulm University

Germany

Gunter Löffler

University of Ulm - Department of Mathematics and Economics ( email )

Helmholzstrasse
Ulm, D-89081
Germany
+49 731 50 23598 (Phone)
+49 731 50 23950 (Fax)

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