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Nomen est omen? How and when company name fluency affects return expectations

Author

Listed:
  • Achiel Fenneman
  • Dirk-Jan Janssen
  • Sven Nolte
  • Stefan Zeisberger

Abstract

Investors perceive stocks of companies with fluent names as more profitable. This perception may result from two different channels: a direct, non-deliberate affect toward fluent names or a deliberate interpretation of fluent names as a signal for company quality. We use preregistered experiments to disentangle these channels and test their limitations. Our results indicate the existence of a significant non-deliberate fluency effect, while the deliberate fluency effect can be activated and deactivated in boundary cases. Both effects are consistent across different groups of participants. However, whereas the fluency effect is strong in isolation, it has limitations when investors are confronted with additional information about the stock.

Suggested Citation

  • Achiel Fenneman & Dirk-Jan Janssen & Sven Nolte & Stefan Zeisberger, 2023. "Nomen est omen? How and when company name fluency affects return expectations," PLOS ONE, Public Library of Science, vol. 18(8), pages 1-15, August.
    • Handle: RePEc:plo:pone00:0287995
    DOI: 10.1371/journal.pone.0287995
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    References listed on IDEAS

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    1. Shah, Anuj K. & Oppenheimer, Daniel M., 2007. "Easy does it: The role of fluency in cue weighting," Judgment and Decision Making, Cambridge University Press, vol. 2(6), pages 371-379, December.
    2. Anuj K. Shah & Daniel M. Oppenheimer, 2007. "Easy does it: The role of fluency in cue weighting," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 2, pages 371-379, December.
    3. David Hirshleifer, 2001. "Investor Psychology and Asset Pricing," Journal of Finance, American Finance Association, vol. 56(4), pages 1533-1597, August.
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