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Nomen est Omen: How Company Names Influence Short- and Long-Run Stock Market Performance

Author

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  • Pensa, Pascal

    (University of Basel)

Abstract

I use a survey methodology to obtain consensus ratings of 64 Swiss company names. The survey evidence suggests that simple cognitive company name characteristics do affect the buy and sell decision of respondents. Furthermore, I find that respondents attribute positive stock performance rather to a nice name than to an ugly name. In the empirical results I present new evidence on IPO underpricing for the Swiss stock market. Further results indicate that not only do firms with a favourable name rating exhibit significantly higher initial returns upon going public, but also exhibit higher (abnormal) stock returns up to 10 trading days after the initial offering. Subsample analysis and the application of standard benchmark-adjusted return measurement techniques reveals that the effect correlates highly with hot issue markets.

Suggested Citation

  • Pensa, Pascal, 2006. "Nomen est Omen: How Company Names Influence Short- and Long-Run Stock Market Performance," Working papers 2006/13, Faculty of Business and Economics - University of Basel.
    • Handle: RePEc:bsl:wpaper:2006/13
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    Cited by:

    1. Zhang, Yefeng & Zhang, Yuyu & Yao, Troy, 2022. "Fraudulent financial reporting in China: Evidence from corporate renaming," Journal of Contemporary Accounting and Economics, Elsevier, vol. 18(1).

    More about this item

    Keywords

    initial public offerings; hot markets; bubbles; heuristics;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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