The Dot Com Effect: the impact of e-commerce announcements on the market value of firms
ICIS '99 Proceedings of the 20th international conference on Information Systems
ICIS '00 Proceedings of the twenty first international conference on Information systems
RE-Thinking the Network Economy: The True Forces That Drive the Digital Marketplace
RE-Thinking the Network Economy: The True Forces That Drive the Digital Marketplace
Place to Space: Migrating to Ebusiness Models
Place to Space: Migrating to Ebusiness Models
Opening the "Black Box" of Network Externalities in Network Adoption
Information Systems Research
The Impact of E-Commerce Announcements on the Market Value of Firms
Information Systems Research
Informational cascades in IT adoption
Communications of the ACM - Human-computer etiquette
The Wisdom of Crowds
Buy, Lie, and Sell High: How Investors Lost Out on Enron and the Internet Bubble
Buy, Lie, and Sell High: How Investors Lost Out on Enron and the Internet Bubble
The Dark Side of Valuation
Economics and Electronic Commerce: Survey and Directions for Research
International Journal of Electronic Commerce
Electronic Commerce Research and Applications
What drives global ICT adoption? Analysis and research directions
Electronic Commerce Research and Applications
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This work proposes that information cascade theory can help to explain the formation of the Internet bubble. We propose that the bubble existed because a lack of good information about the potential value of electronic commerce led investors to rely on other investors' private valuations of electronic commerce. We use the event study methodology to estimate returns to company announcements of electronic commerce initiatives in 1999 and 2000. We find that after controlling for network externalities and time trends, investors' valuations of the returns to electronic commerce initiatives were significantly influenced by the market return from prior periods. Moreover, the relative weight placed on prior periods' returns decreased as the variance of the prior periods' returns increased. Both of the results are consistent with the behavior predicted by information cascade theory.