Does the change in the company’s name affect the share price? The case study of the Polish capital market

• Authors: Asyngier Roman
• Languages of publication: EN

Abstracts

EN

Aim/purpose – The paper was aimed to find out if abnormal returns occur before and after changes in the names of companies listed on the Warsaw Stock Exchange. Design/methodology/approach – Due to the fact that this was an early stage of the research, an appropriate methodology was used in the research which took into account indexes of relative force of quotations of some selected companies in relation to the wide Warsaw Stock Exchange WIG index. Findings – The research findings proved the existence of positive abnormal returns before the name changes and negative trends after the name changes in companies in the long term. Comparing the average volume of share trading before and after the name changes in companies, no positive effect was noticed in this scope. Research implications/limitations – The clear and unambiguous results appear to be significant for investors while taking investment decisions. Therefore, the conclusions from the findings of the pilot research need to be confirmed and verified in further studies on the problem, with the use of a more advanced methods. Originality/value/contribution – The paper represents one of the few empirical studies on the impact of the name changes of listed companies on the share prices in relation to the emerging markets, and the first ones concerning the Polish share market. The findings of the study may give grounds to discuss and identify practical causes of market behaviors as a result of changes in companies’ names.

Keywords

EN

Abnormal returns; Name changes; Warsaw Stock Exchange

• Publisher: Uniwersytet Ekonomiczny w Katowicach
• Journal: Journal of Economics and Management
• Year: 2018
• Volume: 32
• Pages: 18-29

Contributors

author

Asyngier Roman

• Department of Financial Markets. Faculty of Economics. Maria Curie-Skłodowska University, Lublin, Poland

References

• Agnihotri, A., & Bhattacharya, S. (2017). Corporate name change and the market valuation of firms: Evidence from an emerging market. International Journal of the Economics of Business, 24(1), 73-90. doi: 10.1080/13571516.2016.1253186
• Andrikopoulos, P., Daynes, A., & Paraskevas, P. (2007). The long-term market performance of UK companies following corporate name changes. Retrieved from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1002188.
• Bałtowski, M., & Kwit, J. (2002). Wycena przez rynek kapitałowy przedsiębiorstw sprywatyzowanych [Evaluation of privatized enterprises by the capital market]. In M. Bałtowski (Ed.), Przedsiębiorstwa sprywatyzowane w gospodarce polskiej [Privatized enterprises in the Polish economy] (pp. 167-169). Warszawa: WN PWN.
• Bosch, J. C., & Hirschey, M. (1989). The valuation effects of corporate name changes. Financial Management, 18(4), 64-73. doi: 10.2307/3665798
• Cooper, M. J., Dimitrov, O., & Rau, P. R. (2001). A Rose.com by any other name. The Journal of Finance, 56(6), 2371-2388. doi: 10.1111/0022-1082.00408
• Cooper, M. J., Khorana, A., Osobov, I., Patel, A., & Rau P. R. (2005). Managerial actions in response to a market downturn: Valuation effects of name changes in the dot.com decline. Journal of Corporate Finance, 11, 319-335. doi: 10.1016/j.jcorpfin.2004.02.005
• Fama, E. F., Fisher, L., Jensen, M. C., & Roll, R. (1969). The adjustment of stock prices to new information. International Review, 10, 1-21. doi: 10.2139/ssrn.321524
• Filipek, J. (2011). Strategiczne powody zmian nazw spółek giełdowych [Strategic reasons for changing of the listed companies]. Retrieved from https://www.bankier.pl/wiadomosc/Strategiczne-powody-zmian-nazw-spolek-gieldowych-2431393.html
• Green, T. C., & Jame, R. (2013). Company name fluency, investor recognition, and firm value. Journal of Financial Economics, 109, 813-834. doi: 10.1016/j.jfineco.2013.04.007
• Horsky, D., & Swyngedouw, P. (1987). Does it pay to change your company’s name? A stock market perspective. Marketing Science, 6(4), 320-335. doi: 10.1287/mksc.6.4.320
• Josev, T., Chan, H., & Faff, R. (2004). What’s in a name? Evidence on corporate name changes from the Australian capital market. Pacific Accounting Review, 16(1), 57-75. doi: 10.1108/01140580410818469
• Karbhari, Y., Sori, Z. M., & Mohamad, S. (2004). Shareholder wealth effects and corporate name change: Evidence from Malaysia. Corporate Ownership and Control, 2(1), 38-49. doi: 10.2139/ssrn.596184
• Karpoff, J. M., & Rankine, G. (1994). In search of a signaling effect: The wealth effects of corporate name changes. Journal of Banking & Finance, 18(6), 1027-1045. doi: 10.1016/0378-4266(94)00058-1
• Kashmiri, S., & Mahajan, V. (2015). The name’s the game: Does marketing impact the value of corporate name changes? Journal of Business Research, 68, 281-290. doi: 10.1016/j.jbusres.2014.07.007
• Kot, H. W. (2011). Corporate name changes: Price reactions and long-run performance. Pacific-Basin Finance Journal, 19(2), 230-244. doi: 10.1016/j.pacfin.2010.10.003
• Kwestarz, P. (2015). O farbowanych lisach na giełdzie – dlaczego należy na nie uważać [Cunning foxes on the stock market – why to watch them]. Retrieved from https://strefainwestorow.pl/artykuly/20151023/o-farbowanych-lisach-na-gieldzie-dlaczego-nalezy-na-nie-uwazac
• Mase, B. (2009). The impact of name changes on company value. Managerial Finance, 35(4), 316-324. doi: 10.1108/03074350910935812
• Mayo, R. L. (2013). Do corporate name changes affect share price? An event studies analysis of corporate rebranding on the NYSE. Retrieved from https://robertmayo.files.wordpress.com/2014/03/do-corporate-name-changes-affect-share-price-an-event-studies-analysis-of-corporate-rebranding-on-the-nyse.pdf
• Muzellec, L., & Lambkin, M. (2006). Corporate rebranding destroying, transferring or creating brand equity? European Journal of Marketing, 40(7/8), 803-824. doi: 10.1108/03090560610670007
• Smith, D. C., & Park, W. (1992). The effects of brands extensions on market share and advertising efficiency. Journal of Marketing Research, 29(3), 296-313. doi: 10.2307/3172741
• Wu, Y. (2010). What’s in a name? What leads a firm to change its name and what the new name foreshadows. Journal of Banking & Finance, 34(6), 1344-1359. doi: 10.1016/j.jbankfin.2009.11.029

Identifiers

ISSN

1732-1948