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| Author: | Goldfarb, B. Kirsch, D. Miller, D.A. |
| Title: | Was there too little entry during the Dot Com era? |
| Journal: | Journal of Financial Economics
2007 : OCT, VOL. 86:1, p. 100-144 |
| Index terms: | finance investments equity capital new enterprise information technology Internet models |
| Language: | eng |
| Abstract: | In this paper, four stylized facts are presented about the Dot Com era: 1. there was a widespread belief in a Get Big Fast (GBF) business strategy, 2. public and private equity investments' increase and decrease was most prominent in the Internet and information technology sectors, 3. the survival rate of dot com firms is on the same level or higher than other emerging industries, and 4. firm survival is independent of private equity funding. Offered is a herding model accommodating a divergence btw. the information and incentives of venture capitalists and their investors. A GBF belief cascade could have led to overly focused investment in too few Internet startups and too little entry. |
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