Two explanations are commonly offered for the large number of recent IPOs b
y Internet firms. The first argues that Internet firms are trying to grab m
arket share in an industry with large economies of scale. The second argues
that Internet firms are rushing to go public when Internet stuck prices ar
e irrationally high. In this paper we examine the actions of those closest
to Internet firms - firm managers, underwriters, and venture capitalists -
to determine their motives for going public. Numerous strategic alliances a
nd mergers and acquisitions provide strong evidence of a rush to grab marke
t share. Other factors provide only weak evidence that Internet IPOs are at
tempts to sell overpriced stock. (C) 2001 Elsevier Science S.A. All rights
reserved. JEL classification. G13: G32.