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Who Drove and Burst the Tech Bubble?
Author(s) -
GRIFFIN JOHN M.,
HARRIS JEFFREY H.,
SHU TAO,
TOPALOGLU SELIM
Publication year - 2011
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/j.1540-6261.2011.01663.x
Subject(s) - hedge fund , arbitrage , business , institutional investor , monetary economics , stock (firearms) , mutual fund , investment (military) , economics , financial system , finance , corporate governance , mechanical engineering , politics , political science , law , engineering
From 1997 to March 2000, as technology stocks rose more than five‐fold, institutions bought more new technology supply than individuals. Among institutions, hedge funds were the most aggressive investors, but independent investment advisors and mutual funds (net of flows) actively invested the most capital in the technology sector. The technology stock reversal in March 2000 was accompanied by a broad sell‐off from institutional investors but accelerated buying by individuals, particularly discount brokerage clients. Overall, our evidence supports the bubble model of Abreu and Brunnermeier (2003), in which rational arbitrageurs fail to trade against bubbles until a coordinated selling effort occurs.