Company Name Fluency and Stock Returns

40 Pages Posted: 22 Feb 2018 Last revised: 23 Feb 2019

See all articles by Maurizio Montone

Maurizio Montone

Utrecht University

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: February 1, 2019

Abstract

Recent research shows that stocks with fluent names trade at higher prices. It is not clear, however, whether fluency simply appeals to naive investors, or conveys information on the quality of the firm. In this paper, we tease out these two stories. We show that companies with fluent names exhibit higher profitability, but this information is not fully captured by investors and analysts. Stocks with fluent names then yield higher abnormal returns than stocks with nonfluent names, especially when beginning-of-period sentiment is high. Overall, we provide a new kind of confirmation of the tendency of investors to undervalue intangibles.

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 (February 1, 2019). 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)

VU Amsterdam - School of Business and Economics ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands

Remco C.J. Zwinkels

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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