THE ROLE OF ACCOUNTING DATA AND WEB-TRAFFIC IN THE PRICING OF GERMAN INTERNET STOCKS

Andreas Trautwein and Sven Vorstius

A chapter in The Rise and Fall of Europe's New Stock Markets, 2004, pp 157-180 from Emerald Group Publishing Limited

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.

Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:eme:afeczz:s1569-3732(04)10007-8

DOI: 10.1016/S1569-3732(04)10007-8

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