What's in a 'China' Name? A Test of Investor Attention Hypothesis

Financial Management, Forthcoming

43 Pages Posted: 29 May 2009 Last revised: 2 Dec 2011

Kee-Hong Bae

York University - Schulich School of Business

Wei Wang

Queen's School of Business; University of Pennsylvania - The Wharton School

Date Written: August 1, 2011

Abstract

We study whether firm name affects investor attention and thereby firm valuation. Some Chinese firms listed on U.S. stock exchanges have the word “China” or “Chinese” included in their company names (“China-name stocks”), whereas others do not (“non-China-name stocks”). During the China stock market boom in 2007, we find that China-name stocks significantly outperform non-China-name stocks. This is not due to differences in firm characteristics, risk, or liquidity. The “China-name effect” is largely consistent with the investor attention hypothesis that the price pressure caused by increased investor attention on China-name stocks during the boom period drives up China-name stocks more than non-China-name stocks.

Keywords: China-name Stocks, Investor Attention, Initial Public Offering, American Depositary Receipt

JEL Classification: G10, G14

Suggested Citation

Bae, Kee-Hong and Wang, Wei, What's in a 'China' Name? A Test of Investor Attention Hypothesis (August 1, 2011). Financial Management, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1411788

Kee-Hong Bae

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada
416-736-2100 ext) 20248 (Phone)
416-736-5687 (Fax)

Wei Wang (Contact Author)

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Queen's School of Business ( email )

143 Union Street
Kingston, Ontario K7L 3N6
Canada

Paper statistics

Downloads
432
Rank
53,846
Abstract Views
2,518