Corporate Name Changes: The Association Between Functional Name Characteristics And Stock Performance

Abstract

A well-chosen corporate name communicates much information and emotion to a firm’s publics.  Despite the tremendous costs involved in a corporate name change, many corporations change names when pursuing a new strategic direction.  In this study, we examine the relationship between functional name characteristics and stock performance around name change announcements.  The results show that “distinctiveness” is the most important explanatory variable of abnormal stock returns.