Nomen Est Omen? How and When the Fluency of Company Names Affects Return Expectations

20 Pages Posted: 30 Jul 2022

See all articles by Achiel Fenneman

Achiel Fenneman

Radboud University - Donders Centre for Cognitive Neuroimaging

Dirk-Jan Janssen

Radboud University

Sven Nolte

Radboud University

Stefan Zeisberger

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

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Abstract

Investors perceive stocks of companies with fluent names as more profitable. This perception may result from two different channels: direct, non-deliberate affect toward fluent names or indirect, deliberate interpretation of fluent names as a signal for company quality. We present a preregistered novel experimental design to disentangle these channels and test their limitations. Our results indicate that the direct fluency effect outweighs an indirect effect; that is, investors do not treat company names as signals for company quality. However, whereas the direct fluency effect is strong in isolation, it has limitations when investors are confronted with additional information about the stock.

Keywords: G4, G12

Suggested Citation

Fenneman, Achiel and Janssen, Dirk-Jan and Nolte, Sven and Zeisberger, Stefan, Nomen Est Omen? How and When the Fluency of Company Names Affects Return Expectations. Available at SSRN: https://ssrn.com/abstract=4176843 or http://dx.doi.org/10.2139/ssrn.4176843

Achiel Fenneman

Radboud University - Donders Centre for Cognitive Neuroimaging ( email )

Netherlands

Dirk-Jan Janssen

Radboud University ( email )

Nijmegen
Netherlands

Sven Nolte

Radboud University ( email )

Nijmegen
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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