Journal of Management Research

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The Impact of Stock Name Change on Shareholder Wealth


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1 School of Business Studies Punjab Agricultural University Ludhiana 141004, Punjab
     

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Renaming of stock corresponds to creation of a new name with the intention of developing a differentiated position in the mind of investors. Stock renaming, although, commonly referred to in financial press and periodically posted on stock exchange websites, has received little attention from academia especially in Indian context. We aim to fill this gap by analysing the impact of corporate name change on shareholder's wealth, using event study methodology. We focus on firms listed on National Stock Exchange and Bombay Stock Exchange, who have made stock name change announcements in the period starting from 1 April 2010 to 31 March 2012. We sampled 55 stock name change announcements and further categorized them into large cap, mid cap, and small cap stocks. We found no evidence of significant abnormal returns or significant cumulative abnormal returns in the event period (e-5, e, e+5) for large cap and mid cap stocks. We do find evidence of significant positive cumulative abnormal returns in the e+5 period and significant abnormal positive returns on e- 1 and e-2 days for small cap stocks.

Keywords

Stock Name Change, Event Study
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  • The Impact of Stock Name Change on Shareholder Wealth

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Authors

Mohit Gupta
School of Business Studies Punjab Agricultural University Ludhiana 141004, Punjab
Navdeep Aggarwal
School of Business Studies Punjab Agricultural University Ludhiana 141004, Punjab

Abstract


Renaming of stock corresponds to creation of a new name with the intention of developing a differentiated position in the mind of investors. Stock renaming, although, commonly referred to in financial press and periodically posted on stock exchange websites, has received little attention from academia especially in Indian context. We aim to fill this gap by analysing the impact of corporate name change on shareholder's wealth, using event study methodology. We focus on firms listed on National Stock Exchange and Bombay Stock Exchange, who have made stock name change announcements in the period starting from 1 April 2010 to 31 March 2012. We sampled 55 stock name change announcements and further categorized them into large cap, mid cap, and small cap stocks. We found no evidence of significant abnormal returns or significant cumulative abnormal returns in the event period (e-5, e, e+5) for large cap and mid cap stocks. We do find evidence of significant positive cumulative abnormal returns in the e+5 period and significant abnormal positive returns on e- 1 and e-2 days for small cap stocks.

Keywords


Stock Name Change, Event Study

References