Market Valuation of Internet Companies: Investigation of Possibility of a New Tech-bubble

Abstract

The main objectives of the actual research are: • to explore whether, and how the value relevance of financial variables for Internet companies change during the periods of market booms and afterwards on the example of U.S. listed companies; • to separate within the framework of behavioral finance theory the effect that emotions, social mood, irrational thinking have in the market; • to evaluate the situation around recent speculations with regards to the question of a new dot-com bubble; • to prognosticate further development and perspectives. Research proves the fact that financial variables lose its value-relevance during the periods of market booms and regain it afterwards. Investigation of current situation demonstrates no indication of market in the bubble and prejudices the perspectives of its creation in the near future.