| Before the listed company change the name, you first need to pass the resolution by the shareholders, release the reason for the name alteration of the market many times, and then report it to relevant management departments,and finally after all the audit can the name of the listed company be changed. All information such as the reason for the company name alteration has been reflected before the day of the announcement of name alteration, the name alteration of the company stock is just the final confirmation of the information. Existing literature shows that during the name alteration of the company stock the phenomenon that the cumulative average abnormal yield of the stock is significantly not at zero is abnormal. Because the announcement of name alteration of the stock actually does not contain any company change information, so how to explain this abnormal phenomenon? Similarly according to the existing literature because of different reasons and industries, the CAAR is different, but why? Traditional finance holds that markets are effective, but the influence on the yield of event that the announcement of name alteration of the company does not contain any information can not be explained. Therefore, based on the theory of behavioral finance, I explain abnormal earnings and the reversal of the later period from two perspectives of investor attention and emotion.In this paper, we mainly use event study to research market reaction of the name alteration of the company, and the impact of investor attention and emotion on the market reaction. The sample selected is the175listed companies taking the initiative to change the name from January1,2011to December31,2013, and the event window researched is (1,+11). When significant excess returns and cumulative excess return appears in event window (1,+1), behavioral finance can explain this phenomenon. Establishing regression model, explanation variables such as investor attention, investor sentiment and control variables:book-to-market ratio of the company, proportion of institutional investors, the company size, profit margin of total assets, the first big shareholder’s shareholding ratio and the listed years of the company. In addition, in this paper I studied the various factors influencing market reaction of the rename announcement through regression analysis. The main research conclusions are as follows:(1) there is significant positive excess return rate in the event window (1,+1) of stock rename announcement, while in the subsequent event window (+2,+11) there appears a reversal phenomenon,not only reflecting that the market is overactive to name-changing events, but also illustrating that the market is not efficient. Since the sample in the stock can get significantly positive average excess yields on the rename announcement day and the day after it; besides the cumulative excess yields rate is significantly positive within the event window (1,+1), namely the market has an obvious reaction during the rename announcement period. The stock price began to fall since the fourth day of stock name change announcement, producing a negative average abnormal returns i.e.a downturn of the share price. According to the market efficiency hypothesis of Fama, all the average excess yields rate in the securities market should be zero.However,under the effect of overreaction, reverse correction will result in the average excess return not being zero. Therefore a market where overreaction exists cannot be called an efficient one.(2) The attention from investors has a great effect on company’s rename announcement market. There is positive correlation between investors attention and the excess yields rate within the event window (1,+1) on the company rename announcement day, that is, the more attention paid by investors, the higher the excess yields rate within the event window (1,+1) on the company rename announcement day. However,there is negative correlation between investors attention and the excess yields rate within the event window (+2.+11) on the company rename announcement day, that is, the more attention paid by investors, the lower the excess yields rate within the event window (+2,+11) on the company rename announcement day.(3) The investor’s sentiment has a great effect on the market reaction of the announcement of name alteration. There is positive correlation between investors sentiment and the excess yields rate within the event window (-1,+1) on the company rename announcement day, that is, the more sentiment paid by investors, the higher the excess yields rate within the event window (-1,+1) on the company rename announcement day. And there is negetive correlation between investors sentiment and the excess yields rate within the event window (+2,+11) on the company rename announcement day, that is, the more sentiment paid by investors, the lower the excess yields rate within the event window (+2,+11) on the company rename announcement day.(4) The degree of name alteration of listed company has no significant effect on the market reaction of the announcement of name alteration. The investor’s sentiment and attention have a great effect on the market reaction of the announcement of name alteration and institutional investors have significant influence on the rename announcement of listed company. But the degree of name alteration of the stock, the company size, book-to-market ratio, the first big shareholder’s shareholding ratio and the listed years of the company do not have great influence on the rename announcement.Combined with the above analysis conclusion can be that:in this paper, the influence on the yield of event that the announcement of name alteration of the company does not contain any information has been explained in the perspective of behavioral finance.At the end of the article according to the main results of the empirical research, I put forward the following general policy advice and investment advice. China’s securities regulator should reasonably specify the access system of the name alteration of the listed company, take reasonable restrictions as for the fact that on the market some companies just change the name without any change of the name for the main business,give correct guidance to the vast number of investors and reduce the abnormal fluctuations of the stock market.(2) The regulator should specify the company’s information disclosure system, strengthen the intensity of penalties for the violation of the system of the name alteration of the1company, and timely warn to investors the investment risk.(3) The investment strategy advice for investors. Investors should have a certain market sensitivity to the name alteration of the company and buy the stock one day before the announcement and sell3days after the announcement to ensure to maximize investment returns of the investors. And studies show that investor sentiment and attention have a great effect on the market reaction of the announcement of name alteration. Investors should pay attention to the essence of the name alteration of the company, whether the company’s main business has changed and analyze the company’s future development, and do not blindly follow the crowd, leading to loss of the investment benefit. |
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