Company name fluency, investor recognition, and firm value

T. Clifton Green, Russell Jame

Research output: Contribution to journalArticlepeer-review

109 Scopus citations

Abstract

Research from psychology suggests that people evaluate fluent stimuli more favorably than similar information that is harder to process. Consistent with fluency affecting investment decisions, we find that companies with short, easy to pronounce names have higher breadth of ownership, greater share turnover, lower transaction price impacts, and higher valuation ratios. Corporate name changes increase fluency on average, and fluency-improving name changes are associated with increases in breadth of ownership, liquidity, and firm value. Name fluency also affects other investment decisions, with fluently named closed-end funds trading at smaller discounts and fluent mutual funds attracting greater fund flows.

Original languageEnglish
Pages (from-to)813-834
Number of pages22
JournalJournal of Financial Economics
Volume109
Issue number3
DOIs
StatePublished - Sep 2013

Keywords

  • Company names
  • Fluency
  • Investor recognition

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management

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