Anomalies About The Halo Of China-name Stocks

The majority of small and medium-sized ordinary investors in the stock market,, when they face a large number of stocks to begin their first investment, there is no condition to pay attention to them one by one. Therefore, they are more depending on their own intuitive feelings as the indoor of investment. Wherein, the stock name as a most direct symbol of the stock is often used by investors as a standard for judging whether it is worth the investment. These investors tend to make an initial judgment on the value of the company by guessing its industry background and "plate", which is based on the literal comprehension of a stock name. And thus they have a special preference for these stocks. For example, the public investors generally believe that the stock with the words "country" in its name should have a comparative advantage in capital, market, reputation, it should have a bright growing potential and bring a high investment rate of return. It’s an ordinary phenomenon in Chinese securities market on the worship of the "China" name.Then, does the "China" stock name really have an affect on the investors ’choices and stock prices? We choose the stocks, whose IPO is in the Shanghai stock market during2006.6-2008.8,as our sample stocks. Some of these have the word "China" including in their company names, whereas others do not. We used the monthly P/E data to analyze, and found that:firstly, investors did have a special preference on the "China" stock name, and even a kind of blind worship. It’s proved that the "China" name stocks have a20times higher monthly price-earnings ratio than the" non-China "name stocks on the first IPO day and the following five months. Secondly, although investors have a special preference on the "China" name stocks, this preference can not be prolonged. It’s only five months after the IPO to promote the stock price positively, but subsequently the positively promoting effect is decreased gradually on the significance level, and weakened gradually on the extent until it disappears. This paper breaks through the most studies, which are mainly focused on empirical tests on the classical financial anomalies in Chinese securities markets. At the same time, this paper is neither to study the impact on stock prices from the stock name pronunciation fluency, nor limited to study the impact on stock prices from name changing. We simply aim to study the impact on stock prices form the expressive function of stock name. This will contribute to promoting the development of Chinese behavior finance, help companies to select a good name and help investors to behavior more rationally.Although this article confirmed that the investors in Chinese securities market did have blind worship for "China" name stocks, and further the behavior did cause the share prices more high, this paper is still lack of a part, which is aimed to analyze the stock return influence, i.e., whether investors, who did buy this kind of stocks, will really get the expected abnormal returns. Therefore, it’s necessary to collect the earnings data of the samples in the first day of IPO and the subsequent12months, to calculate and compare each group of the abnormal returns. With it we will make the China-name-effect more persuasive.