End-word tones of stock names and stock price anomalies: Empirical evidence from China's IPO markets

Qian Wang, Chunyan Zhou, Lei Wang and Yu Wei

Finance Research Letters, 2023, vol. 58, issue PC

Abstract: Behavioral finance research has shown that in IPO market, both the stock name and the stock code can affect investors' judgement of the value of a stock, thus causing significant IPO price anomalies. However, no study has examined the possible impact of the end-word tones of the stock names on investors' cognitive biases and their consequences in the Chinese IPO market. The results of this paper show that, firstly, the average price-to-earnings (P/E) ratios of stocks with easy pronunciation of the end-word tones in their names (easy-pronunciation stocks) are consistently higher than those of stocks with difficult pronunciation (difficult-pronunciation stocks), both on the first day of the IPO and about six months after the IPO. Secondly, on the first day of the IPO, easy-pronunciation stocks have higher abnormal returns than those of difficult-pronunciation stocks, but in the following 12 months, the cumulative abnormal returns of easy-pronunciation stocks decreases more than those of the difficult-pronunciation stocks. Finally, the effects of end-word tone on both P/E ratios and abnormal returns of IPO stocks in China are generally significant through the first day of the IPO to the following 12 months, but these effects change from positive to negative about six months after the IPO day.

Keywords: Behavioral finance; Price anomalies; End-word tones; Price-earnings ratios; Abnormal returns (search for similar items in EconPapers)
JEL-codes: C32 C58 G11 Q40 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612323009443
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:58:y:2023:i:pc:s1544612323009443

DOI: 10.1016/j.frl.2023.104572

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().