3 Data Collection

Table 1 provides a breakdown of the number of firms and observations in the samples studied in this paper. Unlike Kozberg (2001) but consistent with most other papers in the Internet literature, this paper restricts its focus to firms with positive levels of Internet activity. This is done in order to restrict the sample to firms that are dependent on web activity for revenues, for which the hypothesized path diagram is more likely to be a reasonable description. Accounting data for these firms comes from Compustat for quarters ending in 1999 through March 2001.

The top rows of Table 2 provide descriptive financial statistics for these Internet firms. The average (median) market value of these companies is $3.21 billion ($464 million) and average (median) revenues are about the same at $80 million ($17.1 million). Mean (median) net income is ?$66.9 million ( ?$14.9 million) and the market-to-book ratio is 8.48(2.99). ^[5] These descriptive statistics are consistent with the larger sample examined in Kozberg (2001).