The Long-Term Market Performance of UK Companies Following Corporate Name Changes
De Montfort University - Department of Accounting and Finance
University of Portsmouth - Business School
University of Portsmouth
This study investigates the predictive power of corporate name changes on companies' subsequent long-term stock market performance. Using a total sample of 803 name change events associated with companies that have been officially listed in the UK market during the period 1987 to 2002, we give evidence that on average, markets perceive the change of the corporate name as a negative signal regarding companies' future. This post-event long-term market underperformance is robust for companies with both positive and negative pre-event market performances and asymmetric between pre-event "best" and "worst" market performers. Our results are also supportive to the claim that the market reacts only slowly to the information content of a name change announcement.
Number of Pages in PDF File: 46
Keywords: Name Change, Behavioural Finance, Market Performance, Underreaction Hypothesis
JEL Classification: G14, G32working papers series
Date posted: July 22, 2007
© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo7 in 0.375 seconds