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A Long†Run Performance Perspective on the Technology Bubble

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  • Maximilian Franke
  • Gunter Löffler

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.

Suggested Citation

  • Maximilian Franke & Gunter Löffler, 2018. "A Long†Run Performance Perspective on the Technology Bubble," The Financial Review, Eastern Finance Association, vol. 53(2), pages 379-412, May.
    • Handle: RePEc:bla:finrev:v:53:y:2018:i:2:p:379-412
    DOI: 10.1111/fire.12162
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