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

33 Pages Posted: 15 Feb 2023

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: 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

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=4359892 or http://dx.doi.org/10.2139/ssrn.4359892

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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