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Facebook IPO won't change our lives, but it should change US markets


16/05/2012

By Daniel Hunter

From its significance for global markets to its potential impact on our daily lives, two leading Cornell University researchers reflect on Facebook’s record-setting initial public offering this week.

“Facebook is about to pull off a record-setting IPO," Andrew Karolyi, professor of finance at Cornell’s Samuel Curtis Johnson Graduate School of Management, said.

"The listing is obviously a milestone for the company, its employees, Mark Zuckerberg and its current and prospective investors, and highlights the supersonic growth of social media.

“But it is also a milestone event for NASDAQ and U.S. public equity markets; so much so that it serves as a reminder of how much ground has been lost to other competing markets around the world for promoting IPO activity. Congress passing the JOBS Act last month was a useful opening gambit toward making public equity markets in the U.S. more vibrant, but so much more needs to be done.

“What we really need to do is figure out the best way to attract the Facebook-like firms popping up all around the world to go public in U.S. markets.”

No cause for panic — Facebook will stay true to its vision

“While there are some grumblings that the Facebook user experience will most likely change after Friday's initial public offering, I feel that there are two main reasons why the IPO won't change a thing," Jeff Hancock, professor of communication and of computer and information science, Cornell University.

“First, people already understand Facebook is a for-profit company that’s using social networking information to generate revenue. And second, Facebook leadership, from Mark Zuckerberg on down, has been very resistant to forces that try to modify the site in a way that isn’t part of their vision — which is to keep it growing and make it a part of people's lives as much as possible.”

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