Study on the relationship between Word Preference and Stock Returns under the background of intelligent information

Yunhong Li,F Wen,S.M Ziaei

doi:10.1051/e3sconf/202127501048

Yunhong Li, F Wen + Show 1 more

Open Access

https://doi.org/10.1051/e3sconf/202127501048

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Abstract

Based on intelligent informatics, this study examines whether corporate names with implications of luck and taboo have different effects on firm value using a sample of Chinese IPO firms. With the help of the green service system, it can provides investment decisions for the consumers. We find that after controlling for other influencing factors, P/E ratios are positively associated with lucky names but have a slightly negative relationship with taboo names. Similarly, CARs are positively correlated to lucky names but negatively with taboo names. The results also indicate that China’s IPO firms with taboo names have higher first-day returns, but drop faster than do other firms, indicating that these firms experience lower pricing when getting listed. Our findings highlight the economically meaningful role of firms’ names in the process of going public.

Highlights

A n umber of r esearchers i nvestigate f actors a ffecting investment behaviors t hrough ps ychological theories such a s c ognitive bias
We examine the performance about of price-to-earnings r atio ( P/E r atio) and f irst-day to 12 -month c umulative a bnormal r eturns i nitial f irst o f after i nitial p ublic o ffering (IP O) firms w ith b etween lucky a nd t aboo names f irms
W e address t his i ssue by s tudying t he P /E ratios and CARs of China’s IPO firms during the period of 19 90-2009

Summary

Introduction

A n umber of r esearchers i nvestigate f actors a ffecting investment behaviors t hrough ps ychological theories such a s c ognitive bias. How ps ychological r easons a ffect stock r eturns have attracted wide attention in academics. In c apital m arket, t he s tudies f ocus on t he e ffect o f name c hange on t he s tock r eturns. Analysts c laim t hat investors prefer cer tain t ypes o f names, and t hat t he value o f a c ompany’s na me s hould be reflected i n t he stock price. We examine the performance about of price-to-earnings r atio ( P/E r atio) and f irst-day to 12 -month c umulative a bnormal r eturns i nitial f irst o f after i nitial p ublic o ffering (IP O) firms w ith b etween lucky a nd t aboo names f irms. Using a s ample of 866 domestic I POs d uring December 1 990 t o D ecember 2009, we f ind t hat f irms’ n ames play a s tatistically significant a nd e conomically meaningful r ole i n t he process of going public

Lucky and Taboo Names in Chinese Culture

Econometric Model

Data Description

Empirical Results

Conclusion