Title: High-tech IPOs in the USA, UK and Europe after the dot-com bubble

Authors: Keith Pilbeam, Frank Nagle

Addresses: City University, Northampton Square, London EC1V 0HB, UK. ' Mandiant, Inc., 675 North Washington Street, Suite 210, Alexandria, VA 22314, USA

Abstract: From 1998 to 2001, the high-tech industry saw a dramatic increase and subsequent sharp decline in market capitalisation during a phenomenon known as the dot-com bubble. During this time there were a large number of private companies that made the decision to go public via an Initial Public Offering (IPO) of stock on the general equities market. After the dot-com crash of 2001, the IPO market for high-tech companies changed dramatically. Far fewer companies went public, and they had much lower first-day returns than those during the bubble. This paper explores the first-day returns of high-tech IPOs in the USA and Europe in the post-bubble era. We compare the results of the 2002–2005 post-bubble period with those of the 1998–2001 dot-com bubble period. We find that the high-tech IPO market was dramatically affected by the dot-com crash and that, after the crash, the number of high-tech IPOs dropped considerably, as did the average first-day returns of these IPOs. Finally, we find that the European high-tech IPO market was not as adversely affected by the dot-com crash as the American market.

Keywords: initial public offerings; IPO; first-day returns; corporate finance; USA; United States; UK; United Kingdom; Europe; dot-com bubble; market capitalisation; high-tech companies; high technology; dot-com crash.

DOI: 10.1504/IJFSM.2009.026637

International Journal of Financial Services Management, 2009 Vol.4 No.1, pp.64 - 75

Received: 21 Jan 2009
Accepted: 28 Apr 2009
Published online: 21 Jun 2009 *

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