Ticker fluency, sentiment, and asset valuation

Greg Durham and Mukunthan Santhanakrishnan

The Quarterly Review of Economics and Finance, 2016, vol. 61, issue C, 89-96

Abstract: The objective of this study is to examine whether investors channel their propensity to speculate differently depending on the fluency of a stock's ticker (i.e., the ticker's ease of pronunciation). Baker and Wurgler (2006) suggest that this propensity to speculate defines investor sentiment, and Green and Jame (2013) contend that fluency of a company's name can affect the level of investor recognition for the stock. We hypothesize that when investors speculate, they speculate in stocks that have greater recognition and thus cause such stocks to be overvalued. We test this hypothesis by examining whether, when beginning-of-period sentiment is high, stocks with most-fluent tickers underperform stocks with least-fluent tickers (as measured by returns). We find that in periods preceded by high sentiment, stocks with most-fluent tickers have lower returns than stocks with least-fluent tickers have. This study contributes to the literature by documenting that stock prices are affected by characteristics of securities with no bearing on stocks’ underlying cash flows, risk characteristics, or required returns. Additionally, a readily usable measure of the affinity that an investor might have for a particular ticker is presented and developed.

Keywords: Fluency; Sentiment; Investor recognition; Ticker symbols; Behavioral finance; Asset pricing (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1062976915001180
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:quaeco:v:61:y:2016:i:c:p:89-96

DOI: 10.1016/j.qref.2015.11.010

Access Statistics for this article

The Quarterly Review of Economics and Finance is currently edited by R. J. Arnould and J. E. Finnerty

More articles in The Quarterly Review of Economics and Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().