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Information Technology, Venture Capital and the Stock Market

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  • Singh, Ajit
  • Singh, Alaka
  • Wiess, Bruce

Abstract

This paper investigates the relationship between information technology and capital markets, specifically the enabling and stimulating role of the stock market in the `new economy.' A multivariate analysis is used to test the hypothesis that, other things being equal, a more fully developed and mature stock market encourages both faster development of ICT and its use. The findings reveal that stock markets are neither a necessary nor sufficient condition for promoting the development of ICT. Many economies, particularly in Northern Europe, have been able to achieve a high degree of ICT development without a central role for US-style venture capital, IPOs and stock market institutions. Others, with long flourishing stock markets, have failed to become leaders in ICT development. Even in relation to the US where the stock market has, arguably, enhanced the diffusion of ICT in the economy, the paper suggests the markets are not without considerable downsides.

Suggested Citation

  • Singh, Ajit & Singh, Alaka & Wiess, Bruce, 2000. "Information Technology, Venture Capital and the Stock Market," Accounting and Finance Discussion Papers 00-af47, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camafp:00-af47
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    References listed on IDEAS

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    1. Ajit Singh, 1998. "Savings, investment and the corporation in the East Asian miracle," Journal of Development Studies, Taylor & Francis Journals, vol. 34(6), pages 112-137.
    2. Black, Bernard S. & Gilson, Ronald J., 1998. "Venture capital and the structure of capital markets: banks versus stock markets," Journal of Financial Economics, Elsevier, vol. 47(3), pages 243-277, March.
    3. Singh, Ajit & Dhumale, Rahul, 2000. "Globalization, Technology, and Income Inequality A Critical Analysis," WIDER Working Papers 295543, United Nations University, World Institute for Development Economic Research (UNU-WIDER).
    4. Dale W. Jorgenson & Kevin J. Stiroh, 2000. "Raising the Speed Limit: U.S. Economic Growth in the Information Age," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(1), pages 125-236.
    5. Stephen D. Oliner & Daniel E. Sichel, 2000. "The Resurgence of Growth in the Late 1990s: Is Information Technology the Story?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 3-22, Fall.
    6. Singh, A., 1991. "Corporate Takeovers: A Review," Cambridge Working Papers in Economics 9206, Faculty of Economics, University of Cambridge.
    7. Robert J. Gordon, 2000. "Does the "New Economy" Measure Up to the Great Inventions of the Past?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 49-74, Fall.
    8. Sophie Manigart & Koen De Waele* & Mike Wright & Ken Robbie & Philippe Desbrières & Harry Sapienza & Amy Beekman, 2000. "Venture capitalists, investment appraisal and accounting information: a comparative study of the USA, UK, France, Belgium and Holland," European Financial Management, European Financial Management Association, vol. 6(3), pages 389-403, September.
    9. Ajit Singh, 1999. "Should Africa promote stock market capitalism?," Journal of International Development, John Wiley & Sons, Ltd., vol. 11(3), pages 343-365.
    10. Franklin Allen, "undated". "Stock Markets and Resource Allocation (Reprint 036)," Rodney L. White Center for Financial Research Working Papers 15-92, Wharton School Rodney L. White Center for Financial Research.
    11. Hicks, J. R., 1969. "A Theory of Economic History," OUP Catalogue, Oxford University Press, number 9780198811633.
    12. Mayer,Colin & Vives,Xavier (ed.), 1993. "Capital Markets and Financial Intermediation," Cambridge Books, Cambridge University Press, number 9780521443975, September.
    13. Shleifer, Andrei, 2000. "Inefficient Markets: An Introduction to Behavioral Finance," OUP Catalogue, Oxford University Press, number 9780198292272.
    14. Singh, Ajit, 1994. "Corporate financial patterns in industrialising economies: a comparative international study," MPRA Paper 54936, University Library of Munich, Germany.
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    Citations

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    Cited by:

    1. Ajit Singh & Jack Glen & Ann Zammit & Rafael De-Hoyos & Alaka Singh & Bruce Weisse, 2005. "Shareholder Value Maximisation, Stock Market and New Technology: Should the US Corporate Model be the Universal Standard?," International Review of Applied Economics, Taylor & Francis Journals, vol. 19(4), pages 419-437.
    2. Bilal Mehmood & Anam Shafique & Rabia Rafaqat, 2014. "Is Solow’s Paradox Absent in World Leading Capital Markets? Econometric Evidence," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 17(52), pages 45-62, June.
    3. Ajit Singh, 2003. "Corporate governance, corporate finance and stock markets in emerging countries," Working Papers wp258, Centre for Business Research, University of Cambridge.
    4. Hali Edison & Torsten Sløk, 2003. "The impact from changes in stock market valuations on investment: new economy versus old economy," Applied Economics, Taylor & Francis Journals, vol. 35(9), pages 1015-1023.
    5. Mr. Torsten M Sloek & Ms. Hali J Edison, 2001. "New Economy Stock Valuations and Investment in the 1990s," IMF Working Papers 2001/078, International Monetary Fund.
    6. Fatemeh Faghani & Solmaz Habibi & Seyed Mehdi Tabatabaee & Leila Razavi & Mohammad Kazem Emadzadeh, 2013. "The Role of Information Technology on Stock Market Development," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 3(1), pages 353-358, January.
    7. Singh, Ajit & Singh, Alaka & Weisse, Bruce, 2002. "Corporate governance, competition, the new international financial architecture and large corporations in emerging markets," MPRA Paper 53665, University Library of Munich, Germany.
    8. Ashwani Saith, 2018. "Ajit Singh (1940–2015), the Radical Cambridge Economist: Anti†imperialist Advocate of Third World Industrialization," Development and Change, International Institute of Social Studies, vol. 49(2), pages 561-628, March.
    9. Charles Amo Yartey, 2006. "Financial Development, the Structure of Capital Markets, and the Global Digital Divide," IMF Working Papers 2006/258, International Monetary Fund.
    10. Sunil Mani & Anthony Bartzokas, 2004. "Institutional support for investment in new technologies: the role of venture capital institutions in developing countries," Chapters, in: Anthony Bartzokas & Sunil Mani (ed.), Financial Systems, Corporate Investment in Innovation, and Venture Capital, chapter 6, Edward Elgar Publishing.
    11. Fink, Gerhard & Haiss, Peter & Vuksic, Goran, 2009. "Contribution of financial market segments at different stages of development: Transition, cohesion and mature economies compared," Journal of Financial Stability, Elsevier, vol. 5(4), pages 431-455, December.

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    More about this item

    Keywords

    information technology; stock markets; venture capital; IPOs;
    All these keywords.

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • L0 - Industrial Organization - - General
    • G0 - Financial Economics - - General

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