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Corporate name change and shareholder wealth effect: Empirical evidence in the French Stock Market

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  • Bicha Karim

    (09, Rue du Golfe - Route de la Plage)

Abstract

This article focuses on the shareholder wealth effect of corporate name changes. Using an event study methodology, we tried to analyse the market reaction following 83 announcements made during the 2004–2007 period by firms listed in ‘ Euronext Paris’. The results show globally a positive impact on stock prices during the event window and in consequence on shareholder wealth. The market reacted, in fact, positively at the announcement day and firm's average market value continued to increase during the post-event period reflecting the economic potential of the operation. Therefore, our findings support ‘The shareholder value maximisation hypothesis’ (Woolridje and Snow) about strategic decision value effect, as the corporate name changes seem to be profitable for shareholders.

Suggested Citation

  • Bicha Karim, 2011. "Corporate name change and shareholder wealth effect: Empirical evidence in the French Stock Market," Journal of Asset Management, Palgrave Macmillan, vol. 12(3), pages 203-213, August.
    • Handle: RePEc:pal:assmgt:v:12:y:2011:i:3:d:10.1057_jam.2011.9
    DOI: 10.1057/jam.2011.9
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    References listed on IDEAS

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    1. Brown, Stephen J. & Warner, Jerold B., 1985. "Using daily stock returns : The case of event studies," Journal of Financial Economics, Elsevier, vol. 14(1), pages 3-31, March.
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    Cited by:

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    3. Prateek Sharma & Samit Paul, 2021. "Game of names: Blockchain premium in corporate names," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(5), pages 1059-1078, July.
    4. Arpita Agnihotri & Saurabh Bhattacharya, 2017. "Corporate Name Change and the Market Valuation of Firms: Evidence from an Emerging Market," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 24(1), pages 73-90, January.
    5. Jungmi Park & Yoojin Shin, 2022. "Corporate Sustainability and Market Response According to the Name Change Strategy: Focusing on Korean IT Industry Firms," Sustainability, MDPI, vol. 14(19), pages 1-15, September.
    6. Neelam Rani & Aman Asija, 2017. "Signaling Power of Corporate Name Change: A Case of Indian Firms," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 18(3), pages 173-181, September.
    7. Eachempati, Prajwal & Srivastava, Praveen Ranjan & Kumar, Ajay & Muñoz de Prat, Javier & Delen, Dursun, 2022. "Can customer sentiment impact firm value? An integrated text mining approach," Technological Forecasting and Social Change, Elsevier, vol. 174(C).

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