IPO Pricing in the Dot-Com Bubble

41 Pages Posted: 14 May 2002

See all articles by Alexander Ljungqvist

Alexander Ljungqvist

Stockholm School of Economics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Research Institute of Industrial Economics (IFN)

William J. Wilhelm

University of Virginia - McIntire School of Commerce

Multiple version iconThere are 3 versions of this paper

Date Written: April 2002

Abstract

IPO initial returns reached astronomical levels during 1999-2000. We show that the regime shift in initial returns and other elements of pricing behaviour can be at least partially accounted for by a variety of marked changes in pre-IPO ownership structure and insider selling behaviour over the period which reduced key decision-makers' incentives to control underpricing. After controlling for these changes, there appears to be little special about the 1999-2000 period, aside from the preponderance of Internet and high-tech firms going public. Our results suggest that it was firm characteristics that were unique during the 'dot-com bubble' and that pricing behaviour followed from incentives created by these characteristics.

Keywords: Initial public offerings, underpricing, intermediation, Internet, hot issue markets

JEL Classification: G24, G32

Suggested Citation

Ljungqvist, Alexander and Wilhelm, William J., IPO Pricing in the Dot-Com Bubble (April 2002). CEPR Discussion Paper No. 3314. Available at SSRN: https://ssrn.com/abstract=312014

Alexander Ljungqvist (Contact Author)

Stockholm School of Economics ( email )

111 60 Stockholm
Sweden

Centre for Economic Policy Research (CEPR)

London
United Kingdom

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

William J. Wilhelm

University of Virginia - McIntire School of Commerce ( email )

Rouss & Robertson Halls, East Lawn
P.O. Box 400173
Charlottesville, VA 22904-4173
United States
434-924-7666 (Phone)
434-924-7074 (Fax)

HOME PAGE: http://gates.comm.virginia.edu/wjw9a/

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