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The Role Of Accounting Data And Web-Traffic In The Pricing Of German Internet Stocks

In: The Rise and Fall of Europe's New Stock Markets

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  • Andreas Trautwein
  • Sven Vorstius

Abstract

This study looks at the value-relevance of accounting data and measures of web-traffic for Internet firms listed on the Neuer Markt. We show that earnings and cash flows cannot explain the valuation of Internet companies, while we report a positive association between total sales and market capitalisation. In addition, sales and marketing as well as research and development expenses are relevant value-drivers. Furthermore, we find a positive relation between market values and a number of web-metrics such as customer loyalty, reach, page impressions, and unique visitors. We conclude that during the Internet bubble, measures of web-traffic provided at least as much explanatory power for market values as financial statement information.

Suggested Citation

  • Andreas Trautwein & Sven Vorstius, 2004. "The Role Of Accounting Data And Web-Traffic In The Pricing Of German Internet Stocks," Advances in Financial Economics, in: The Rise and Fall of Europe's New Stock Markets, pages 157-180, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:afeczz:s1569-3732(04)10007-8
    DOI: 10.1016/S1569-3732(04)10007-8
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