
eBay, Inc. (B)
Schill, Michael J....
eBay, Inc. (B)
Schill, Michael J.; Burnett, Jason
F-1358 | Published March 22, 2002 | 1 pages. Case
Collection: Darden School of Business
Product Details
This case examines the Fall 1998 decision of eBay management to proceed with the company's initial public offering during the quietest IPO market in twenty years. In Case A, eBay's Chief Financial Officer considers the financial and competitive implications of delaying the offering, as well as the challenge of fairly pricing the shares of an emerging unseasoned Internet stock. The case provides an excellent forum for students to discuss the costs and benefits of going public. Case B reviews the events of eBay's first trading day and the associated 160 percent return on the shares. With such a backdrop, students are exposed to one of the well-known finance anomalies--the IPO underpricing phenomenon--and are invited to critically discuss various proposed explanations. The case provides opportunities for the instructor to develop any of the following teaching objectives: -Review the institutional aspects of the equity issuance transaction. -Explore the costs and benefits associated with public share offerings. -Examine the impact of market turbulence on the IPO market. -Develop an appreciation for the difficulty of valuing unseasoned firms. -Evaluate the received explanations of various finance anomalies, such as the IPO underpricing anomaly.
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