likely to be interested in internet IPOs, because in this period there were so many of them, and many of them had dramatic first-day returns(Benveniste, Ljungqvist, Wilhelm and Yu 2003, Ljungqvist and Wilhelm 2003 and Ritter and Welch 2003). Second, as the internet industry was new, there was no history of cash flows of comparable firms that had gone public. This made valuations difficult, and so expectations of future cash flows for internet IPOs were more likely to be sensitive to media news(Blanchard and Watson 1982, Hirota and Sunder 2002 provide experimental evidence. )Third, the limits to arbitrage were more binding for internet IPOs during the period of 1996-2000(Lamont and Thaler 2003 and Ofek and Richardson 2003), so the divergence of stock prices from their fundamental value was likely to be greater for internet IPOs. Further, institutional investors did not attempt to trade against market movements, but actively rode with both the run-up and run-down of the stock( Griffin, Harris and Topaloglu 2003 and Brunnermeier and Nagel 2004). Fourth, and finally, there is now increasing evidence that the spectacular rise and spectacular fall of internet IPOs in the late 1990s can not be reconciled with fundamentals( Cooper, Dimitrov and Rau 2001, Ofek and Richardson 2002, Loughran and Ritter 2004). A good place to begin looking for other explanations is to formally explore the economic role of the media in this period Was the overall media coverage different for internet IPOs? We read all news items that came out between 1996 through 2000 on 458 internet IPOs and a matching sample of 458 non-internet IPOs -a total of 171, 488 news items- and classify each news item as good news, neutral news or bad news. We find not surprisingly, that the media coverage was more intense for internet IPOs. All types of news-good bad, or neutral - were more for internet IPOs than for non-internet IPOs in both the bubble period and the post-bubble period. Second, we use net news(good news minus bad news) to proxy media sentiment. We find that compared to the matching sample, the net news was more positive for internet IPOs in the bubble 2 Cutler, Poterba and Summers(1989) is one of the early papers that show stock return variances cannot be caused by fundamental news such as macroeconomic news s Shiller(2000) believes that the stock price increases in the late 1990s were driven by irrational euphoria among individual investors, fed by an emphatic media, which maximized TV ratings and catered to investor demand for pseudo-news. Professional investors"are not immune from the effects of the popular investing culture that we observe in individual investors'(p. 18) 4 The issue whether media sentiment reflects public sentiment or is different from public sentiment-though nteresting in its own right, is beyond the scope of this paper2 likely to be interested in internet IPOs, because in this period there were so many of them, and many of them had dramatic first-day returns (Benveniste, Ljungqvist, Wilhelm and Yu 2003, Ljungqvist and Wilhelm 2003 and Ritter and Welch 2003). Second, as the internet industry was new, there was no history of cash flows of comparable firms that had gone public. This made valuations difficult, and so expectations of future cash flows for internet IPOs were more likely to be sensitive to media news (Blanchard and Watson 1982; Hirota and Sunder 2002 provide experimental evidence.) Third, the limits to arbitrage were more binding for internet IPOs during the period of 1996-2000 (Lamont and Thaler 2003 and Ofek and Richardson 2003), so the divergence of stock prices from their fundamental value was likely to be greater for internet IPOs. Further, institutional investors did not attempt to trade against market movements, but actively rode with both the run-up and run-down of the stock (Griffin, Harris and Topaloglu 2003 and Brunnermeier and Nagel 2004). Fourth, and finally, there is now increasing evidence that the spectacular rise and spectacular fall of internet IPOs in the late 1990s can not be reconciled with fundamentals (Cooper, Dimitrov and Rau 2001, Ofek and Richardson 2002, Loughran and Ritter 2004).2 A good place to begin looking for other explanations is to formally explore the economic role of the media in this period.3 Was the overall media coverage different for internet IPOs? We read all news items that came out between 1996 through 2000 on 458 internet IPOs and a matching sample of 458 non-internet IPOs – a total of 171,488 news items – and classify each news item as good news, neutral news or bad news. We find, not surprisingly, that the media coverage was more intense for internet IPOs. All types of news – good, bad, or neutral – were more for internet IPOs than for non-internet IPOs in both the bubble period and the post-bubble period. Second, we use net news (good news minus bad news) to proxy media sentiment.4 We find that compared to the matching sample, the net news was more positive for internet IPOs in the bubble 2 Cutler, Poterba and Summers (1989) is one of the early papers that show stock return variances cannot be caused by fundamental news such as macroeconomic news. 3 Shiller (2000) believes that the stock price increases in the late 1990s were driven by irrational euphoria among individual investors, fed by an emphatic media, which maximized TV ratings and catered to investor demand for pseudo-news. Professional investors “are not immune from the effects of the popular investing culture that we observe in individual investors” (p.18). 4 The issue – whether media sentiment reflects public sentiment or is different from public sentiment – though interesting in its own right, is beyond the scope of this paper