Online Investment Banking Phase I: Distribution via the Internet and Its Impact on IPO Performance

摘要

In the past few years, there has been a growth in Internet markets run byonline investment bankers, where companies and investors can buy and sell initialpublic offerings (IPOs) of corporate stock. In this study, we confine our examinationto the first of what we anticipate will be several phases in the evolution of InternetIPOs: the online distribution of shares. This implies the beginning of a generalJournal of the Association for Information Systems 2disintermediation in the IPO process where traditional roles of investment banks arebeing circumvented via the Internet as participants search for greater marketefficiency. This is an important research area because potentially it affects all publiccompanies, or companies considering going public, the investment bankingindustry, and all stock investors.We address two research issues not considered by previous studies. Whatfactors affect organizational choice of online vs. traditional IPO distribution? Whatare the financial performance differences for IPOs distributed using online andtraditional processes? These issues were addressed using company characteristicand financial performance data from 27 IPOs from the last half of 1998. We findthat the Internet IPO firms are larger, have younger CEOs, choose more reputableinvestment banks and are more likely to be involved in a Web-based business,directly employing the Internet in their product or service, than the firms that choosethe traditional method of going public. In addition, market performance, both initiallyand over the first three months of trading, is significantly greater for Internet IPOs.