Company Name Fluency and Stock Returns

29 Pages Posted: 22 Feb 2018  

Martijn J. van den Assem

VU Amsterdam - School of Business and Economics

Maurizio Montone

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE); Erasmus Research Institute of Management (ERIM); Tinbergen Institute

Remco C. J. Zwinkels

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

Date Written: June 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 unsophisticated investors. In this paper, we tease out these two hypotheses. We find that fluent stocks yield higher risk-adjusted returns than nonfluent ones, and that this difference increases with the size of noise trader demand. These results lend support to the information story, according to which fluency is only partly reflected in prices due to noise traders' inability to evaluate it. Our findings speak to a more general literature on the underpricing of intangibles.

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

JEL Classification: G10, G12, G14, G32.

Suggested Citation

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

Martijn J. Van den Assem

VU Amsterdam - School of Business and Economics ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands

Maurizio Montone (Contact Author)

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
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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