Company Name Fluency and Stock Returns

30 Pages Posted: 22 Feb 2018 Last revised: 21 Sep 2021

See all articles by Maurizio Montone

Maurizio Montone

Utrecht University

Martijn J. van den Assem

Vrije Universiteit Amsterdam

Remco C. J. Zwinkels

VU University Amsterdam - Department of Finance and Financial Sector Management

Date Written: September 21, 2021

Abstract

Previous research shows that stocks with fluent names trade at higher prices. In this paper, we test whether fluency simply appeals to naive investors, or actually identifies better firms. We find that companies with fluent names are more profitable, but unsophisticated investors appear to neglect this information. Correspondingly, stocks with fluent names yield higher abnormal returns relative to stocks with nonfluent names. Consistent with our theoretical model, these effects are concentrated among firms with low market capitalization and high sensitivity to investor sentiment. The results lend novel support to the view that company names convey information.

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

JEL Classification: G12, G14, G41

Suggested Citation

Montone, Maurizio and van den Assem, Martijn J. and Zwinkels, Remco C.J., Company Name Fluency and Stock Returns (September 21, 2021). Available at SSRN: https://ssrn.com/abstract=3123201 or http://dx.doi.org/10.2139/ssrn.3123201

Maurizio Montone

Utrecht University ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, +31 30 253 7373 3584 EC
Netherlands

Martijn J. Van den Assem (Contact Author)

Vrije Universiteit Amsterdam ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands

Remco C.J. Zwinkels

VU University Amsterdam - Department of Finance and Financial Sector Management ( email )

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

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

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