Abstract
Name change is not uncommon for businesses around the world. Previous researches focusing on developed markets showed mixed results on the relationship between equity valuation and corporate name changes. Such relationship poses a more baffling question in emerging markets with rapid economic and technological changes. Based on a sample of 150 companies which are quoted on Chinese AStock market and have changed the corporate name once between 2009 and 2019, the study investigates the impact of name change on companies’ stock performance in terms of abnormal returns. The results show that companies undergone name changes experience abnormal return fluctuations around announcement dates. Investors respond positively to name changes owing to merger and acquisition in the short term, while name changes because of restructuring or reputation could degrade firms’ market values. Name changes due to the change in business type generate no significant stock price reaction. From valuation management perspective, our findings indicate that name change serves more of a market signal to investors rather than an optimal value addition strategy to listing companies.
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