Who Drove and Burst the Tech Bubble?

145 Pages Posted: 24 Oct 2003 Last revised: 17 Nov 2010

See all articles by John M. Griffin

John M. Griffin

University of Texas at Austin - Department of Finance

Jeffrey H. Harris

American University - Department of Finance and Real Estate

Tao Shu

The Chinese University of Hong Kong, Shenzhen; Shenzhen Finance Institute

Selim Topaloglu

Queen's University - Smith School of Business

Date Written: November 15, 2010

Abstract

From 1997 to March 2000, as technology stocks rose more than five-fold, institutions bought more new technology supply than individuals. Among institutions, hedge funds were the most aggressive investors, but independent investment advisors and mutual funds (net of flows) actively invested the most capital in the technology sector. The technology stock reversal in March 2000 was accompanied by a broad sell-off from institutional investors but accelerated buying by individuals, particularly discount brokerage clients. Overall, our evidence is most consistent with the bubble model of Abreu and Brunnermeier (2003) where rational arbitrageurs fail to trade against bubbles until a coordinated selling effort occurs.

Keywords: Stock Market Bubbles, Institutional Trading, Individual Trading

JEL Classification: G14, G10

Suggested Citation

Griffin, John M. and Harris, Jeffrey H. and Shu, Tao and Topaloglu, Selim, Who Drove and Burst the Tech Bubble? (November 15, 2010). Journal of Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=459803

John M. Griffin (Contact Author)

University of Texas at Austin - Department of Finance ( email )

Red McCombs School of Business
Austin, TX 78712
United States
512-471-6621 (Phone)

HOME PAGE: http://www.jgriffin.info

Jeffrey H. Harris

American University - Department of Finance and Real Estate ( email )

Kogod School of Business
4400 Massachusetts Ave., N.W.
Washington, DC 20016-8044
United States
202-885-6669 (Phone)

Tao Shu

The Chinese University of Hong Kong, Shenzhen ( email )

Shenzhen Finance Institute ( email )

Selim Topaloglu

Queen's University - Smith School of Business ( email )

437 Goodes Hall
143 Union St.
Kingston, Ontario K7L 3N6
Canada
613-533-6573 (Phone)
613-533-2321 (Fax)

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