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IPO Pricing in the Dot-com Bubble
Article first published online: 21 MAR 2003
DOI: 10.1111/1540-6261.00543
1540-6261/asset/cover.gif?v=1&s=5192ce61b1e4bde927ebc2df55b44b4da55ef137 "The Journal of Finance")
Additional Information
How to Cite
Ljungqvist, A. and Wilhelm, W. J. (2003), IPO Pricing in the Dot-com Bubble. The Journal of Finance, 58: 723–752. doi: 10.1111/1540-6261.00543
Publication History
- Issue published online: 21 MAR 2003
- Article first published online: 21 MAR 2003
- Abstract
- References
- Cited By
IPO underpricing reached astronomical levels during 1999 and 2000. We show that the regime shift in initial returns and other elements of pricing behavior can be at least partially accounted for by 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 and 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.