IDEAS home Printed from https://ideas.repec.org/a/spt/stecon/v9y2020i4f9_4_11.html
   My bibliography  Save this article

An Event Based Study on the Name Change Effect on A-Share Quoted Firm Values

Author

Listed:
  • Dejun Xie
  • Ziyue Yan
  • Yiyao Xu
  • Siyang Weng
  • Chirui Zhang

Abstract

Name change is not uncommon for businesses around the world. Previous researches focusing on developed markets showed mixed results on the relationship between equity valuation and corporate name changes. Such relationship poses a more baffling question in emerging markets with rapid economic and technological changes. Based on a sample of 150 companies which are quoted on Chinese A-Stock market and have changed the corporate name once between 2009 and 2019, the study investigates the impact of name change on companies’ stock performance in terms of abnormal returns. The results show that companies undergone name changes experience abnormal return fluctuations around announcement dates. Investors respond positively to name changes owing to merger and acquisition in the short term, while name changes because of restructuring or reputation could degrade firms’ market values. Name changes due to the change in business type generate no significant stock price reaction. From valuation management perspective, our findings indicate that name change serves more of a market signal to investors rather than an optimal value addition strategy to listing companies.  JEL classification numbers: M21, O14, Q01, Q56

Suggested Citation

  • Dejun Xie & Ziyue Yan & Yiyao Xu & Siyang Weng & Chirui Zhang, 2020. "An Event Based Study on the Name Change Effect on A-Share Quoted Firm Values," Journal of Statistical and Econometric Methods, SCIENPRESS Ltd, vol. 9(4), pages 1-11.
  • Handle: RePEc:spt:stecon:v:9:y:2020:i:4:f:9_4_11
    as

    Download full text from publisher

    File URL: http://www.scienpress.com/Upload/JSEM%2fVol%209_4_11.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ernest N. Biktimirov & Farooq Durrani, 2017. "Market reactions to corporate name changes: evidence from the Toronto Stock Exchange," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 13(1), pages 50-69, February.
    2. Brown, Stephen J. & Warner, Jerold B., 1985. "Using daily stock returns : The case of event studies," Journal of Financial Economics, Elsevier, vol. 14(1), pages 3-31, March.
    3. Wu, YiLin, 2010. "What's in a name? What leads a firm to change its name and what the new name foreshadows," Journal of Banking & Finance, Elsevier, vol. 34(6), pages 1344-1359, June.
    4. Kot, Hung Wan, 2011. "Corporate name changes: Price reactions and long-run performance," Pacific-Basin Finance Journal, Elsevier, vol. 19(2), pages 230-244, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pushpanjali Kaul & Sangeeta Arora, 2022. "Reinventing a brand’s identity: effect of name and logo announcements on the stock price of Indian banks," Journal of Brand Management, Palgrave Macmillan, vol. 29(3), pages 258-270, May.
    2. Kashmiri, Saim & Mahajan, Vijay, 2015. "The name's the game: Does marketing impact the value of corporate name changes?," Journal of Business Research, Elsevier, vol. 68(2), pages 281-290.
    3. Arpita Agnihotri & Saurabh Bhattacharya, 2017. "Corporate Name Change and the Market Valuation of Firms: Evidence from an Emerging Market," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 24(1), pages 73-90, January.
    4. Kot, Hung Wan, 2011. "Corporate name changes: Price reactions and long-run performance," Pacific-Basin Finance Journal, Elsevier, vol. 19(2), pages 230-244, April.
    5. Corbet, Shaen & Hou, Yang & Hu, Yang & Lucey, Brian & Oxley, Les, 2021. "Aye Corona! The contagion effects of being named Corona during the COVID-19 pandemic," Finance Research Letters, Elsevier, vol. 38(C).
    6. Jungmi Park & Yoojin Shin, 2022. "Corporate Sustainability and Market Response According to the Name Change Strategy: Focusing on Korean IT Industry Firms," Sustainability, MDPI, vol. 14(19), pages 1-15, September.
    7. Gao, Fox & Faff, Robert & Navissi, Farshid, 2012. "Corporate philanthropy: Insights from the 2008 Wenchuan Earthquake in China," Pacific-Basin Finance Journal, Elsevier, vol. 20(3), pages 363-377.
    8. Devos, Erik & Huang, Jianning & Zhou, Fuzhao, 2021. "The effects of corporate name changes on firm information environment and earnings management," International Review of Financial Analysis, Elsevier, vol. 77(C).
    9. Yue’e Long & Wunhong Su & Yufan Tan, 2023. "Does a Share Name Change Have an Impact on the Pricing Efficiency of the Share?," SAGE Open, , vol. 13(4), pages 21582440231, December.
    10. Fenech, Jean-Pierre & Skully, Michael & Xuguang, Han, 2014. "Franking credits and market reactions: Evidence from the Australian convertible security market," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 32(C), pages 1-19.
    11. Bernard, Jean-Thomas & Idoudi, Nadhem & Khalaf, Lynda & Yelou, Clement, 2007. "Finite sample multivariate structural change tests with application to energy demand models," Journal of Econometrics, Elsevier, vol. 141(2), pages 1219-1244, December.
    12. Denise M. Keele & Susan DeHart, 2011. "Partners of USEPA Climate Leaders: an Event Study on Stock Performance," Business Strategy and the Environment, Wiley Blackwell, vol. 20(8), pages 485-497, December.
    13. Alexandridis, G. & Antypas, N. & Travlos, N., 2017. "Value creation from M&As: New evidence," Journal of Corporate Finance, Elsevier, vol. 45(C), pages 632-650.
    14. Magennis, Darren & Watts, Edward & Wright, Sue, 1998. "Convertible notes: the debt versus equity classification problem," Journal of Multinational Financial Management, Elsevier, vol. 8(2-3), pages 303-315, September.
    15. Carlo Rosa & Giovanni Verga, 2006. "The Impact of Central Bank Announcements on Asset Prices in Real Time: Testing the Efficiency of the Euribor Futures Market," CEP Discussion Papers dp0764, Centre for Economic Performance, LSE.
    16. Nguyen, Tien-Trung & Wu, Yang-Che & Ke, Mei-Chu & Liao, Tung Liang, 2022. "Can direct government intervention save the stock market?," The Quarterly Review of Economics and Finance, Elsevier, vol. 84(C), pages 271-284.
    17. Fungáčová, Zuzana & Godlewski, Christophe J. & Weill, Laurent, 2020. "Does the type of debt matter? Stock market perception in Europe," The Quarterly Review of Economics and Finance, Elsevier, vol. 75(C), pages 247-256.
    18. Flouris, Triant & Walker, Thomas, 2005. "Financial Comparisons Across Different Business Models in the Canadian Airline Industry," 46th Annual Transportation Research Forum, Washington, D.C., March 6-8, 2005 208157, Transportation Research Forum.
    19. Fuller, Kathleen P., 2003. "The impact of informed trading on dividend signaling: a theoretical and empirical examination," Journal of Corporate Finance, Elsevier, vol. 9(4), pages 385-407, September.
    20. Marcos Albuquerque Junior & José António Filipe & Paulo de Melo Jorge Neto & Cristiano da Silva, 2021. "The Study of Events Approach Applied to the Impact of Mergers and Acquisitions on the Performance of Consulting Engineering Companies," Mathematics, MDPI, vol. 9(2), pages 1-20, January.

    More about this item

    Keywords

    Corporate name change; Event study; Corporate Strategy; Market performance; Stock valuation.;
    All these keywords.

    JEL classification:

    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spt:stecon:v:9:y:2020:i:4:f:9_4_11. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Eleftherios Spyromitros-Xioufis (email available below). General contact details of provider: http://www.scienpress.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.