Nomen est omen? How and when company name fluency affects return expectations

33 Pages Posted: 11 May 2022 Last revised: 23 Mar 2023

See all articles by Achiel Fenneman

Achiel Fenneman

Radboud University - Donders Centre for Cognitive Neuroimaging

Sven Nolte

Radboud University

Dirk-Jan Janssen

Radboud University Nijmegen - Department of Economics

Stefan Zeisberger

Radboud University, Institute for Management Research; University of Zurich, Department of Banking and Finance

Multiple version iconThere are 3 versions of this paper

Date Written: March 23, 2023

Abstract

Investors perceive stocks of companies with fluent names as more profitable. This perception may result from two different channels: a direct, non-deliberate affect toward fluent names or a deliberate interpretation of fluent names as a signal for company quality. We use preregistered experiments to disentangle these channels and test their limitations. Our results indicate the existence of a significant non-deliberate fluency effect, while the deliberate fluency effect can be activated in boundary cases. Both effects are consistent across different groups of participants. However, whereas the fluency effect is strong in isolation, it has limitations when investors are confronted with additional information about the stock.

Keywords: return expectations, name fluency, attention, affect, information processing

JEL Classification: G4, G12

Suggested Citation

Fenneman, Achiel and Nolte, Sven and Janssen, Dirk-Jan and Zeisberger, Stefan, Nomen est omen? How and when company name fluency affects return expectations (March 23, 2023). Available at SSRN: https://ssrn.com/abstract=4101904 or http://dx.doi.org/10.2139/ssrn.4101904

Achiel Fenneman

Radboud University - Donders Centre for Cognitive Neuroimaging ( email )

Netherlands

Sven Nolte

Radboud University ( email )

Nijmegen
Netherlands

Dirk-Jan Janssen

Radboud University Nijmegen - Department of Economics ( email )

Nijmegen, 6500 HK
Netherlands

Stefan Zeisberger (Contact Author)

Radboud University, Institute for Management Research ( email )

Nijmegen
Netherlands

University of Zurich, Department of Banking and Finance ( email )

Zürich
Switzerland

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