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The Performance of Internet Firms Following Their Initial Public Offering

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  • Jarrod Johnston
  • Jeff Madura

Abstract

We find that initial returns were more favorable for Internet initial public offerings (IPOs) than non–Internet firm IPOs. Since the demise of the Internet sector, the underpricing of Internet–firm IPOs is not significantly different from other IPOs. Initial returns of Internet firms are positively and significantly related to underwriter prestige and to pre–IPO market conditions. However, initial returns after the demise of the Internet sector are not significantly related to these characteristics. The aftermarket performance of Internet firms is initially favorable but weakens over time. Firms that experienced higher initial returns during the strong Internet cycle experience weaker aftermarket performance.

Suggested Citation

  • Jarrod Johnston & Jeff Madura, 2002. "The Performance of Internet Firms Following Their Initial Public Offering," The Financial Review, Eastern Finance Association, vol. 37(4), pages 525-550, November.
    • Handle: RePEc:bla:finrev:v:37:y:2002:i:4:p:525-550
    DOI: 10.1111/1540-6288.00027
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    Cited by:

    1. Emmanuelle Dubocage & Valérie Revest, 2010. "Une analyse conventionnaliste du prix d’offre des start-up sur le Nouveau Marché français," Revue d'Économie Financière, Programme National Persée, vol. 96(1), pages 215-231.
    2. Alberto Dreassi & Massimiliano Kaucic & Giorgio Valentinuz, 2017. "The Information Content Of Earnings Announcements In The European Insurance Market: An Event Study Analysis," Eurasian Journal of Business and Management, Eurasian Publications, vol. 5(3), pages 1-16.
    3. Erhan Bayraktar & Masahiko Egami, 2008. "Optimizing venture capital investments in a jump diffusion model," Mathematical Methods of Operations Research, Springer;Gesellschaft für Operations Research (GOR);Nederlands Genootschap voor Besliskunde (NGB), vol. 67(1), pages 21-42, February.
    4. Saade, Samer, 2015. "Investor sentiment and the underperformance of technology firms initial public offerings," Research in International Business and Finance, Elsevier, vol. 34(C), pages 205-232.
    5. Monica A. Zimmerman, 2008. "The Influence of Top Management Team Heterogeneity on the Capital Raised through an Initial Public Offering," Entrepreneurship Theory and Practice, , vol. 32(3), pages 391-414, May.
    6. Sanjay Dhamija & Ravinder Kumar Arora, 2017. "Determinants of Long-run Performance of Initial Public Offerings: Evidence from India," Vision, , vol. 21(1), pages 35-45, March.
    7. Cochran, James J. & Darrat, Ali F. & Elkhal, Khaled, 2006. "On the bankruptcy of internet companies: An empirical inquiry," Journal of Business Research, Elsevier, vol. 59(10-11), pages 1193-1200, October.
    8. Keun Jung Lee, 2021. "The Effects of Privatization and Corporate Governance of SOEs in Transition Economies: The Case of Kazakhstan," ADB Institute Series on Development Economics, in: Farhad Taghizadeh-Hesary & Naoyuki Yoshino & Chul Ju Kim & Kunmin Kim (ed.), Reforming State-Owned Enterprises in Asia, chapter 0, pages 113-132, Springer.

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