 CAPITAL FORMATION AND THE INTERNETReena Aggarwal and Sandeep Dahiya Journal of Applied Corporate Finance, 2000, vol. 13, issue 1, 108-113 Abstract: The Internet is expected to play a significant role in the capital‐raising process. Internet investment banks like Wit Capital and WR Hambrecht are supposed to make the IPO process more equitable by giving retail investors access to deals and pricing deals more accurately, thereby leaving less “money on the table” and lowering the cost of going public. This article argues that the Internet will not replace, but will likely “supplement,” the current system. The certification function provided by traditional investment banks and their relationships with institutional investors will continue to be important determinants of a successful offering. Thus, although Internet banks will get pieces of IPO transactions, the lead managers of such deals will continue to be older firms with well‐established reputations and ties with institutions. Nevertheless, the Internet is expected to play a larger role in the case of public bond offerings. Because the issuance of bonds is a repetitive business and the pricing is much simpler, the authors predict that the Internet will significantly reduce the costs of issuing bonds and perhaps limit the role of traditional investment banks in this process. Date: 2000 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:jacrfn:v:13:y:2000:i:1:p:108-113 Ordering information: This journal article can be ordered from Access Statistics for this article Journal of Applied Corporate Finance is currently edited by Donald H. Chew Jr. More articles in Journal of Applied Corporate Finance from Morgan Stanley |
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