Company Name Fluency and Stock Returns
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||General Financial Markets: General (jel G10), Asset Pricing (jel G12), Information and Market Efficiency; Event Studies (jel G14), Financing Policy; Capital and Ownership Structure (jel G32)|
van den Assem, M.J, Montone, M, & Zwinkels, R.C.J. (2018). Company Name Fluency and Stock Returns. Retrieved from http://hdl.handle.net/1765/109089