Equity Valuation and Negative Earnings: The Case of the dot.com Bubble (Accounting, Finance, Sustainability, Governance & Fraud: Theory and Application)

Building upon Feltham and Ohlson models, this book examines positive loss-earnings within the context of the dot.com bubble during the boom years of the late 1990s bull market. The strong demand for equity financing captured the imagination of investors from Europe and U.S. like never before. With a focus on U.S. Internet companies, the book explores both the birth and the death of the new economy, and how negative earnings and losses still garnered large investments and successful IPOs (Initial Public Offerings). As Internet based ventures and the digital economy keep attracting large amounts of equity financing, this book explains that there is something unique in the valuation and pricing of tech companies. The book was written for corporate financiers, capital market professionals, and academics to further their understanding of equity valuation and the effects of equity trading. Front Matter....Pages i-xv Front Matter....Pages 1-1 Introduction....Pages 3-16 Front Matter....Pages 17-17 The Ohlson and Feltham Ohlson Models....Pages 19-41 The Value Relevance of the Variables Earnings and Book Value of Equity for Valuation Purposes....Pages 43-63 The Impact of Investment in Intangible Assets on the Market Value....Pages 65-82 Front Matter....Pages 83-83 Period, Sample Selection and Definition of Variables....Pages 85-106 Method....Pages 107-137 Analysis and Discussion of Results....Pages 139-157 Front Matter....Pages 159-159 Conclusions and Suggestions for Further Research....Pages 161-167