Explaining Revenues and Valuations for Internet Firms

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.

Autorentext

Anthony Kozberg holds a Doctorate in Business Administration fromNew York University and a Bachelor's in Economics from The Wharton School,University of Pennsylvania. He has served on the faculties of CUNY BaruchCollege and Berkeley College. In his spare time, Dr. Kozberg consults to industry andenjoys raising service dogs in training.

Klappentext

There are always developing economic models whichneed better understanding, as the internet has beenrecently. I examine the earlier stages of thissector and develop a framework that encourages betterdata collection and valuations for thesecompanies. With a broad sample of firms, and yet amore refined focus, I show that even while internetfirms as a whole are difficult to value usingaccounting metrics, many business models could bepriced via earnings. Results also show that, sincethe crash in 2000, earnings are increasingly becomingpriced. Meanwhile, non-financial measures related toactivity remain value relevant.I also examine a core difficulty related to analyzingnew businesses, explaining revenue creation. Throughthe use of statistical methods infrequently employedin accounting and finance work, I look for causalrelationships from firm expenditures through toactivity generation and revenues. Results suggestthat expenditures on SG&A and R&D, representinginvestments in website quality, can explain firmperformance. This provides further evidence thatboth accounting and non-financial measures aresignificantly associated with drivers of firm value.