Abstract
Outlines previous research on the pricing of initial public offerings (IPOs), the particular characteristics of e‐commerce firms and the ways in which internet operations differ from traditional business contexts. Uses data from a sample of 28 US business‐to‐business, internet‐based e‐commerce firms to explore the links between industry‐specific and firm‐specific variables, IPO price and subsequent share price performance. Shows generally very high initial returns (115.2 per cent for the run‐up on the first day’s trading!) but negative long‐term returns; and the pricing is significantly positively affected by firm size, commercial strategies and management experience. Finds firms with the highest first day run‐ups were not necessarily the ones with long term underperformance and concludes that investors do actually use information on firm strategy.
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