IPO Pricing in the Dot-com Bubble

William Wilhelm and Alexander Ljungqvist ()

No 2002-FE-07, Economics Series Working Papers from University of Oxford, Department of Economics

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, the difference in underpricing between 1999-2000 and the preceding three years is much reduced. 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.

Date: 2002-04-01
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Journal Article: IPO Pricing in the Dot‐com Bubble (2003)
Working Paper: IPO Pricing in the dot-com Bubble (2002)
Working Paper: IPO Pricing in the Dot-com Bubble (2002)
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