Posted: 16 Dec 2000
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 changes
Suggested Citation: Suggested Citation
Cooper, Michael J. and Dimitrov, Orlin and Rau, P. Raghavendra, A Rose.com by Any Other Name. Journal of Finance Journal of Finance, Vol. 56, No. 6, pp. 2371-2388. Available at SSRN: https://ssrn.com/abstract=254052