Company Name Fluency and Stock Returns

37 Pages Posted: 22 Feb 2018 Last revised: 16 Nov 2018

See all articles by Maurizio Montone

Maurizio Montone

Luxembourg School of Finance

Martijn J. van den Assem

VU Amsterdam - School of Business and Economics

Remco C. J. Zwinkels

Vrije Universiteit Amsterdam; Tinbergen Institute - Tinbergen Institute Amsterdam (TIA)

Date Written: November 1, 2018

Abstract

Recent research shows that stocks with fluent names trade at higher prices, but it is not clear whether fluency conveys information or simply appeals to naïve investors. In this paper, we tease out these two hypotheses. We find that fluent stocks yield higher abnormal returns than nonfluent ones, especially when naïve investor participation is high. These results lend support to the information story, according to which fluency is only partly reflected in prices due to naïve investors' inattention to the informative signal. Our findings provide a new kind of confirmation of the tendency of investors to undervalue intangibles.

Keywords: Fluency; Investor Recognition; Asymmetric Information; Stock Returns

JEL Classification: G10, G12, G14, G32

Suggested Citation

Montone, Maurizio and van den Assem, Martijn J. and Zwinkels, Remco C.J., Company Name Fluency and Stock Returns (November 1, 2018). Available at SSRN: https://ssrn.com/abstract=3123201 or http://dx.doi.org/10.2139/ssrn.3123201

Maurizio Montone

Luxembourg School of Finance ( email )

4 Rue Albert Borschette
Luxembourg, L-1246
Luxembourg

Martijn J. Van den Assem

VU Amsterdam - School of Business and Economics ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands

Remco C.J. Zwinkels (Contact Author)

Vrije Universiteit Amsterdam ( email )

De Boelelaan 1105
Amsterdam, NL-1081HV
Netherlands
+31 20 59 85220 (Phone)

HOME PAGE: http://research.vu.nl/en/persons/remco-zwinkels

Tinbergen Institute - Tinbergen Institute Amsterdam (TIA) ( email )

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

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