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The Long-Term Market Performance of UK Companies Following Corporate Name Changes

46 Pages Posted: 22 Jul 2007  

Panagiotis Andrikopoulos

Coventry University

Arief Daynes

University of Portsmouth - Business School

Paraskevas Pagas

University of Portsmouth

Date Written: July 2007

Abstract

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.

Keywords: Name Change, Behavioural Finance, Market Performance, Underreaction Hypothesis

JEL Classification: G14, G32

Suggested Citation

Andrikopoulos, Panagiotis and Daynes, Arief and Pagas, Paraskevas, The Long-Term Market Performance of UK Companies Following Corporate Name Changes (July 2007). Available at SSRN: https://ssrn.com/abstract=1002188 or http://dx.doi.org/10.2139/ssrn.1002188

Panagiotis Andrikopoulos (Contact Author)

Coventry University ( email )

Priory Street
Coventry, CV1 5FB
United Kingdom
+44(0)247 765 7920 (Phone)

Arief Daynes

University of Portsmouth - Business School ( email )

Portsmouth, PO1 3DE
United Kingdom
+44 23 92844182 (Phone)
+44 23 92844037 (Fax)

HOME PAGE: http://www.port.ac.uk/departments/academic/ams/staff/title,1246,en.html

Paraskevas Pagas

University of Portsmouth ( email )

Department of Accounting and Finance
Portsmouth Business School
Portsmouth, Hants PO1 3DE
United Kingdom
+44(0)23 9284 4721 (Phone)
+44(0)23 9284 4037 (Fax)

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