Does Stock Name Fluency Influence Company Value?

A large number of behavioral finance research shows that the securities market is filled with a lot of irrational factors, and investors’ irrational behavior will affect the company’s value, but the the efficient market hypothesis(EMH) in traditional finance does not fully consider the factors.Stock name a kind of information in the stock market, and the investors are very likely to judge a stock by the name of the stock. Fluency names are more attractive to investors. The study found that, the names which sound familiar, easy to remember and smooth are more attractive to investors. We use the tone value method in linguistics as the smooth measure method. And try to verify whether fluency stock name will affect the value of the company and the mechanism of this effect.Our results show that fluency stock name increase the demand of these stocks, making the company’s shareholders increase. And we find these companies have higher liquidity and higher p/e ratio. Futher research shows that fluency name gives higher Tobin ’s Q and M / B values, the value of the company is also higher, and this relationship is more obvious in small companies. We also found that after controlling for the number of shareholders, we find that the the shareholder number is positively related with the company value and value premium effect of stock name is significantly reduced, which means that the the company value is affected by the ownership. Using the same method, since we found the fluency of the stock name will influence liquidity and p/e, we also control them, it was found, the value premium effect weakened which means that the value of the company’s value is also affected by liquidity and p/e. Of course, this paper does not rule out other mechanisms which can also affect the company value.This paper has the following breakthrough: The measure of fluency is not through the traditional questionnaires and collecting on samples of the company’s stock name, but for the first time using the tone value method in linguistics which is more scientific definition of the fluency of the stock name. And then we looked at whether stock name fluency existence value premium and the mechanism of this action.