relatively more price ramp up on the actual day of offer, which, in turn, induces more underpricing High underpricing in recent similar offerings can indicate that during the period between the registration of the offer and the initial trading of the issue, investors' perceptions of the prospects for the firm have changed. If these improved perceptions are maintained then high underpricing will result. Such underpricing is consistent with rational revelation of"information about industry prospects"(Lowry and Schwert 2001), or because the underpricing reflects excess demand for these type of stocks(Loughran and Ritter 2000) Our hypothesis that stock hype created by both the media and underlying market sentiment fuels momentum trading in the stock of an IPO candidate on listing date has received support in the prior literature. DuCharme et al. (2001)find that the extent of underpricing for US-based Internet companies is systematically related to greater levels of news exposure for the IPO candidate in a seven-day period prior to the IPO. Further, Loughran and Ritter(2000) found that the higher the expected demand for stock prior to listing, the more likely it is that issuers will accept a lower offer price because of the expected appreciation in share price once the stock is listed. When coupled with the unprecedented first day returns achieved in recent years by firms with Internet-focused business models, the findings of Loughran and Ritter(2000)and DuCharme et al. (2001)suggest that stock hype may potentially be playing a significant role in explaining the underpricing in technology IPOs This study extends the findings of duCharme et al. (2001)in an Australian context where domestic corporate law imposes a seven-day media black-out period pre-listing which prevents systematic attempts by issuers to enhance publicity about a prospective offering by publishing media releases. There are possible real economic actions, other than the IPO, that would reasonably be expected to affect firm value. Therefore we have chosen a 10-day window preceding the 'media black-out period to reduce the likelihood of picking up corporate announcements of economic substance. We expand the notion of hype as it was operationalised by DuCharme et al. (2001)to include hype derived from the australian public equity markets sentiment towards public offerings by technology firms. This dimension is motivated by ritter (2001) who suggests that the secondary market performance of comparable firms is likely to influence investor reaction to the present offering To summarise, we posit that, at least in the period examined (1999 and 2000), the level of stock hype is positively associated with stock returns. We examine the first day of trade for initial public offerings by technology firms and predict that8 relatively more price ramp up on the actual day of offer, which, in turn, induces more underpricing. High underpricing in recent similar offerings can indicate that during the period between the registration of the offer and the initial trading of the issue, investors’ perceptions of the prospects for the firm have changed. If these improved perceptions are maintained then high underpricing will result. Such underpricing is consistent with rational revelation of “information about industry prospects” (Lowry and Schwert 2001), or because the underpricing reflects excess demand for these type of stocks (Loughran and Ritter 2000). Our hypothesis that stock hype created by both the media and underlying market sentiment fuels momentum trading in the stock of an IPO candidate on listing date has received support in the prior literature. DuCharme et al. (2001) find that the extent of underpricing for US-based Internet companies is systematically related to greater levels of news exposure for the IPO candidate in a seven-day period prior to the IPO. Further, Loughran and Ritter (2000) found that the higher the expected demand for stock prior to listing, the more likely it is that issuers will accept a lower offer price because of the expected appreciation in share price once the stock is listed. When coupled with the unprecedented first day returns achieved in recent years by firms with Internet-focused business models, the findings of Loughran and Ritter (2000) and DuCharme et al. (2001) suggest that stock hype may potentially be playing a significant role in explaining the underpricing in technology IPOs. This study extends the findings of DuCharme et al. (2001) in an Australian context where domestic corporate law imposes a seven-day media black-out period pre-listing which prevents systematic attempts by issuers to enhance publicity about a prospective offering by publishing media releases. There are possible real economic actions, other than the IPO, that would reasonably be expected to affect firm value. Therefore we have chosen a 10-day window preceding the ‘media black-out’ period to reduce the likelihood of picking up corporate announcements of economic substance. We expand the notion of hype as it was operationalised by DuCharme et al. (2001) to include hype derived from the Australian public equity market’s sentiment towards public offerings by technology firms. This dimension is motivated by Ritter (2001) who suggests that the secondary market performance of comparable firms is likely to influence investor reaction to the present offering. To summarise, we posit that, at least in the period examined (1999 and 2000), the level of stock hype is positively associated with stock returns. We examine the first day of trade for initial public offerings by technology firms and predict that: