Corporate Name Changes: Price Reactions and Long-Run Performance

31 Pages Posted: 15 Nov 2015

See all articles by Hung Wan Kot

Hung Wan Kot

University of Macau - Department of Finance and Business Economics

Date Written: September 14, 2010

Abstract

Stock price reactions and long-run performance after a corporate name change are investigated using a sample of Hong Kong listed companies spanning 1999 to 2008. Corporate name changes are classified into four types. Investors react positively around the announcement date to changes announced as being due to a merger or acquisition, a restructuring or a change in business type. Name changes to provide clarity or for reputational reasons generate no stock price reaction. No abnormal trading activity is detected around the announcement and in the post-event period. There is very weak evidence of a relationship between long-run abnormal stock returns, operating performance changes and corporate name changes. The results suggest that name changes have short-term stock price effects but no long-term relationship with stock price or operating performance.

Keywords: Corporate name change, Hong Kong stock market, Long-run performance, Operating performance

JEL Classification: G14, G34

Suggested Citation

Kot, Hung Wan, Corporate Name Changes: Price Reactions and Long-Run Performance (September 14, 2010). Pacific-Basin Finance Journal, Vol. 19, 2011. Available at SSRN: https://ssrn.com/abstract=2690679

Hung Wan Kot (Contact Author)

University of Macau - Department of Finance and Business Economics ( email )

Macau

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