Does a stock’s name affect its abnormal return? Evidence from different scenarios

Abstract

ABSTRACT This study investigates the impact of a stock’s name on its abnormal return in not only the name change scenario but also a less-disturbed scenario: the IPO scenario. After measuring the characteristics of a stock’s name with informativeness, fluency and luckiness, the results show that a stock’s name does impact its abnormal return in both scenarios. And compared to the name change scenario, this impact is more evident in the IPO scenario. Furthermore, the impact of a stock’s name varies in different Chinese markets as the levels of investor knowledge and experience differ in these markets. The fluency and luckiness of a stock’s name have significantly positive impacts on its abnormal return in the main board, while only informativeness affects the abnormal return significantly in the growth enterprise market.