Abstract
PurposeThe present study, by using signaling perspective aims to investigate short-term valuation impact of rebranding announcements (with name change) on stock performance of 160 service firms listed on NSE NIFTY-500 over the period of 2000–2019.Design/methodology/approachAn event study methodology is used to estimate the cumulative abnormal returns (CARs) and its statistical significance is tested with both parametric and non-parametric test-statistics. Separate analysis has been conducted for firms with “major vs minor” and “restructuring vs non-restructuring” name change.FindingsFindings of the study suggest that rebranding decisions are negatively associated with abnormal returns around the announcement period indicating strong disapproval of name change event. In addition, investors formed strong adverse opinion for major name change firms as compared to minor name change firms. Further, restructured name change sample document larger negative drift than non-restructured sample.Practical implicationsFindings offer substantial repercussions for shareholders who can make informed judgments about name change as a signal of reinventing brand identity. Managers should announce detailed rationale behind name change decision to market for enhancing corporate reputation.Originality/valueThis study contributes to marketing-finance interface literature and is first to examine market reaction to name change of Indian service firms and moreover, made a distinction between major vs minor and restructured vs non-restructured name change events for these firms.
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