There are always developing economic models which
need better understanding, as the internet has been
recently. I examine the earlier stages of this
sector and develop a framework that encourages better
data collection and valuations for these
companies. With a broad sample of firms, and yet a
more refined focus, I show that even while internet
firms as a whole are difficult to value using
accounting metrics, many business models could be
priced via earnings. Results also show that, since
the crash in 2000, earnings are increasingly becoming
priced. Meanwhile, non-financial measures related to
activity remain value relevant.
I also examine a core difficulty related to analyzing
new businesses, explaining revenue creation. Through
the use of statistical methods infrequently employed
in accounting and finance work, I look for causal
relationships from firm expenditures through to
activity generation and revenues. Results suggest
that expenditures on SG&A and R&D, representing
investments in website quality, can explain firm
performance. This provides further evidence that
both accounting and non-financial measures are
significantly associated with drivers of firm value.
need better understanding, as the internet has been
recently. I examine the earlier stages of this
sector and develop a framework that encourages better
data collection and valuations for these
companies. With a broad sample of firms, and yet a
more refined focus, I show that even while internet
firms as a whole are difficult to value using
accounting metrics, many business models could be
priced via earnings. Results also show that, since
the crash in 2000, earnings are increasingly becoming
priced. Meanwhile, non-financial measures related to
activity remain value relevant.
I also examine a core difficulty related to analyzing
new businesses, explaining revenue creation. Through
the use of statistical methods infrequently employed
in accounting and finance work, I look for causal
relationships from firm expenditures through to
activity generation and revenues. Results suggest
that expenditures on SG&A and R&D, representing
investments in website quality, can explain firm
performance. This provides further evidence that
both accounting and non-financial measures are
significantly associated with drivers of firm value.