IPO Pricing in the Dot-Com Bubble: Complacency or Incentives
|Authors:||Ljungqvist, Alexander P.|
Wilhelm, William J. Jr.
|Keywords:||Initial public offerings;Underpricing;Intermediation;Internet;Hot issue markets|
|Abstract:||IPO initial returns reached astronomical levels during 1999-2000. We show that the regime shift in initial returns and other elements of pricing behavior can be at least partially accounted for by a variety of marked changes in pre-IPO ownership structure and insider selling behavior 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 behavior followed from incentives created by these characteristics.|
|Appears in Collections:||Financial Institutions|
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