Abstract
The objective of this paper is to examine whether including words that associate a stock name with a country name might influence investor behavior and stock returns. Across three studies, we collect and analyze both stock market data and individual-level experimental data to show the effect of home-name effect on investors’ behavior and stock market performance. Using stock trading records, Study 1 shows that home-name stocks significantly outperform non–home-name stocks in emerging Chinese stock markets dominated by retail investors. We replicate this home-name effect on individual Chinese investors in randomized experiments (Studies 2 and 3) and further test the underlying psychological process by exploring the mediating effect of investor firm psychological identification. We find that associations with the home country name lead to stronger investor psychological identification with the firm and higher investment intentions, and that this effect is much stronger when investors are motivated to self-enhance. Together, these studies inform firms’ stock naming strategies and provide guidance for financial advising by demonstrating the crucial role of identification in financial decision making.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
