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Discussion Paper Details

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Title: IPO Pricing in the dot-com Bubble

Author(s): Alexander P. Ljungqvist and William J Wilhelm Jr

Publication Date: April 2002

Keyword(s): hot issue markets, initial public offerings, intermediation, internet and underpricing

Programme Area(s): Financial 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 behaviour can be at least partially accounted for by a variety of marked changes in pre-IPO ownership structure and insider selling behaviour over the period which reduced key decision-makers? incentives to control underpricing. After controlling for these changes, there appears to be little special about the 1999-2000 period, aside from the preponderance of Internet and high-tech firms going public. Our results suggest that it was firm characteristics that were unique during the ?dot-com bubble? and that pricing behaviour followed from incentives created by these characteristics.

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Bibliographic Reference

Ljungqvist, A and Wilhelm Jr, W. 2002. 'IPO Pricing in the dot-com Bubble'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=3314