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Early internet IPOs versus subsequent entrants

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  • Beverly Marshall
  • Claire Crutchley
  • Diane Lending

Abstract

This paper examines whether investors in early Internet IPOs earned superior returns to those who invested in later entrants. We document three differences between early public firms in a new Internet technology and their followers: underpricing, operating characteristics at the IPO, and stock price performance after the IPO. We find that there is value in going public relatively early in a new Internet technology. Specifically, long-term returns are significantly higher for the early entrants. We also find evidence, consistent with previous studies that examine hot IPO markets, that the early public firms have better operating characteristics at the IPO than later entrants. Copyright Academy of Economics and Finance 2004

Suggested Citation

  • Beverly Marshall & Claire Crutchley & Diane Lending, 2004. "Early internet IPOs versus subsequent entrants," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 28(1), pages 104-116, March.
    • Handle: RePEc:spr:jecfin:v:28:y:2004:i:1:p:104-116
    DOI: 10.1007/BF02761458
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    References listed on IDEAS

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    1. Michaely, Roni & Shaw, Wayne H, 1994. "The Pricing of Initial Public Offerings: Tests of Adverse-Selection and Signaling Theories," The Review of Financial Studies, Society for Financial Studies, vol. 7(2), pages 279-319.
    2. Barber, Brad M. & Lyon, John D., 1997. "Detecting long-run abnormal stock returns: The empirical power and specification of test statistics," Journal of Financial Economics, Elsevier, vol. 43(3), pages 341-372, March.
    3. Shiller, Robert J, 1990. "Speculative Prices and Popular Models," Journal of Economic Perspectives, American Economic Association, vol. 4(2), pages 55-65, Spring.
    4. repec:bla:jfinan:v:53:y:1998:i:1:p:285-311 is not listed on IDEAS
    5. Brav, Alon & Gompers, Paul A, 1997. "Myth or Reality? The Long-Run Underperformance of Initial Public Offerings: Evidence from Venture and Nonventure Capital-Backed Companies," Journal of Finance, American Finance Association, vol. 52(5), pages 1791-1821, December.
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    Cited by:

    1. Mary Robinson & Richard Robinson, 2012. "Dutch-auction IPOs: institutional development and underpricing performance," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 36(3), pages 521-554, July.

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