Company name fluency and stock returns

Maurizio Montone, Martijn J. van den Assem and Remco C.J. Zwinkels

Journal of Behavioral and Experimental Finance, 2023, vol. 39, issue C

Abstract: Previous research shows that stocks with fluent names trade at higher prices. In this paper, we test whether fluency simply appeals to naive investors, or actually identifies better firms. We find that companies with fluent names are more profitable, but some investors appear to neglect this information. Correspondingly, stocks with fluent names yield higher abnormal returns relative to stocks with nonfluent names. Consistent with our theoretical model, these effects are concentrated among firms with low market capitalization and high sensitivity to investor sentiment. The results lend novel support to the view that company names convey information.

Keywords: Fluency; Investor recognition; Company names; Stock returns (search for similar items in EconPapers)
JEL-codes: G12 G14 G41 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:39:y:2023:i:c:s2214635023000333

DOI: 10.1016/j.jbef.2023.100819

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