Corporate name change and shareholder wealth effect: Empirical evidence in the French Stock Market

Abstract

This article focuses on the shareholder wealth effect of corporate name changes. Using an event study methodology, we tried to analyse the market reaction following 83 announcements made during the 2004-2007 period by firms listed in ' Euronext Paris'. The results show globally a positive impact on stock prices during the event window and in consequence on shareholder wealth. The market reacted, in fact, positively at the announcement day and firm's average market value continued to increase during the post-event period reflecting the economic potential of the operation. Therefore, our findings support 'The shareholder value maximisation hypothesis' (Woolridje and Snow) about strategic decision value effect, as the corporate name changes seem to be profitable for shareholders.

The impact of name change on the financial performance of savings and credit co-operatives in Kenya

“…Studies such as Karbhari et al (2004) establish that restructuring triggers the market reaction to name change. Karim (2011) establishes positive market reaction to name change by firms listed in "Euronext Paris", reflecting the economic potential of name change announcements. Kot (2011) establishes a positive impact of name change on the performance of an organization if it is accompanied by change in business, restructuring, merger or acquisition.…”

“…The study also examines possible regulatory influences on the association between name change and financial performance of deposit-taking SACCOs. Compared to previous studies, which have mainly focused on large, publicly traded companies (Howe, 1982;Bosch and Hirschey, 1989;Cooper et al 2001;Josev et al, 2004;Andrikopoulos et al 2007;Kadapakkam and Misra, 2007;Wu, 2010;Karim, 2011;Kot, 2011;Gupta and Aggarwal, 2014;Durrani, 2013) and insurance companies (Cole et al, 2015), the present study examines name change in mutual financial institutions in a developing country characterized by a vibrant SACCO sector. Relatively few studies have examined the impact of name change in mutually owned organizations (such as SACCOs) whose objectives are slightly different from conventional business organizations.…”

“…Despite the costs associated with name change (Mase, 2009; Durrani, 2013; Cole et al , 2015), its impact on financial performance remains unclear and under-researched. This is because most of the studies on name change focus on large and/or listed companies (Howe, 1982; Bosch and Hirschey, 1989; Cooper et al , 2001; Josev et al , 2004; Andrikopoulos et al 2007; Kadapakkam and Misra, 2007; Wu, 2010; Karim, 2011; Kot, 2011; Durrani, 2013; Gupta and Aggarwal, 2014; Cole et al , 2015). A number of prior studies typically examine stock market reaction to name change.…”

Market Reaction On Changes In Corporate's Name On The Indonesia Stock Exchange

“…(DeFanti and Busch, 2011) found that a more positive and significant reaction occurred in major company name changes compared to minor changes. (Karim, 2011) in his study found that changes in the name of the company had a positive impact on the prosperity of stock investors, where this was seen from the existence of positive abnormal returns on announcements of name changes. (Biktimirov and Durrani, 2017) in their research found that changes in the name of the company in the capital market in Toronto received a positive reaction from investors.…”

Game of names: Blockchain premium in corporate names

“…Some earlier studies document abnormal stock price increase around cryptocurrency‐related name changes (Jain & Jain, 2019). However, other types of corporate name changes have also been associated with an abnormal increase in stock prices (Horsky & Swyngedouw, 1987; Karim, 2011; Kot, 2011). Thus, it is of interest to examine whether the investor behavior around cryptocurrency‐related name changes is different from that observed around other corporate name changes.…”