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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.

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Bibliographic Info

Paper provided by Faculty of Economics, University of Cambridge in its series Accounting and Finance Discussion Papers with number 00-af47.

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Date of creation: Dec 2000
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Handle: RePEc:cam:camafp:00-af47

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Web page: http://www.econ.cam.ac.uk/index.htm

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Keywords: information technology; stock markets; venture capital; IPOs;

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References

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  1. Gordon, Robert J, 2000. "Does the 'New Economy' Measure up to the Great Inventions of the Past?," CEPR Discussion Papers 2607, C.E.P.R. Discussion Papers.
  2. Ajit Singh, 1999. "Should Africa promote stock market capitalism?," Journal of International Development, John Wiley & Sons, Ltd., vol. 11(3), pages 343-365.
  3. Singh, A. & Dhumale, R., 2000. "Globalization, Technology, and Income Inequality: A Critical Analysis," Research Paper 210, World Institute for Development Economics Research.
  4. Hicks, J. R., 1969. "A Theory of Economic History," OUP Catalogue, Oxford University Press, number 9780198811633.
  5. 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.
  6. Shleifer, Andrei, 2000. "Inefficient Markets: An Introduction to Behavioral Finance," OUP Catalogue, Oxford University Press, number 9780198292272.
  7. Philippe Desbrières & Sophie Manigart & Koen De Waele & Mike Wright & Ken Robbie & Harry Sapienza & Amy Beekman, 1999. "Venture capitalists, investment appraisal and accounting information: a comparative study of the US, UK, France, Belgium and Holland," Working Papers CREGO 0991102, Université de Bourgogne - CREGO EA7317 Centre de recherches en gestion des organisations.
  8. Franklin Allen, . "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.
  9. Singh, A., 1995. "Corporate Financial Patterns in Industrializing Economies. A Coparative International Study," Papers 2, World Bank - International Finance Corporation.
  10. 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.
  11. Singh, A., 1991. "Corporate Takeovers: A Review," Cambridge Working Papers in Economics 9206, Faculty of Economics, University of Cambridge.
  12. 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.
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Cited by:
  1. Torsten Sløk & Hali J. Edison, 2001. "New Economy Stock Valuations and Investmen in the 1990s," IMF Working Papers 01/78, International Monetary Fund.
  2. 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.
  3. Charles Amo Yartey, 2006. "Financial Development, the Structure of Capital Markets, and the Global Digital Divide," IMF Working Papers 06/258, International Monetary Fund.
  4. 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.
  5. 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.
  6. Hali Edison & Torsten Sl�k, 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.
  7. Singh, Ajit, 2003. "Corporate governance, corporate finance and stock markets in emerging countries," MPRA Paper 24302, University Library of Munich, Germany.

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