We study why capital asset markets in which buyers pay too much, well in excess of the asset’s long-term equilibrium price, could exist. A well-known example is the initial pricing of IPO shares. Two mechanisms that could generate an artificial short-term temporary demand for the asset are...

During the so called dot-com bubble period in the late 1990s, the question of whether the Internet stock prices could be explained or not by companies' fundamentals was intensely discussed and studied. Ten years later, the high valuations of recent Internet IPOs, justified mostly on the basis of...

We develop a model of stock valuation and optimal IPO timing when investment opportunities are time-varying. IPO waves in our model are caused by declines in expected returns, increases in expected profitability, or increases in prior uncertainty about average profitability. The model predicts...

We develop a model of stock valuation and optimal IPO timing when investment opportunities are time-varying. IPO waves in our model are caused by declines in expected returns, increases in expected profitability, or increases in prior uncertainty about average profitability. The model predicts...