A Rose.com by Any Other Name
Michael J. Cooper
University of Utah - David Eccles School of Business
Purdue University - Krannert School of Management
P. Raghavendra Rau
University of Cambridge
Journal of Finance Journal of Finance, Vol. 56, No. 6, pp. 2371-2388
We document a striking positive stock price reaction to the announcement of corporate name changes to Internet related dotcom names. This dotcom effect produces cumulative abnormal returns on the order of 74% for the ten days surrounding the announcement day. The effect does not appear to be transitory; there is no evidence of a post announcement negative drift. The announcement day effect is also similar across all firms, regardless of the firm's level of involvement with the Internet. A mere association with the Internet seems enough to provide a firm with a large and permanent value increase.
Keywords: Inefficient markets, Investor irrationality, name changesAccepted Paper Series
Date posted: December 16, 2000
© 2015 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo2 in 0.656 seconds