An Empirical Study On The Name Substitution Effect Of Listed Companies Based On Investor Concerns

Change of stock name is a phenomenon that frequently occurs in China's stock market in recent years. As the result of economic activities in the Listing Corporation, the rename of stocks should have no effect on the market because information on the reasons for the stocks rename should have been disclosed. However, the study found that stocks rename has produced a significant price effect, which is contrary to the efficient market. This article attempts to explain this “anomaly" from the perspective of investor attention in behavioral finance.Based on the literature of stocks rename and investor attention, this paper combines theoretical analysis and empirical test, and researches the influence of investor's attention on the relationship between stock rename and stock return. On this basis, the empirical analysis use the non financial enterprises which have changed stock name and which listed in Shanghai Stock Exchange and Shenzhen Stock Exchange from 2012 to 2015 as the study sample, and divided the samples into three groups according to the size of the company, the reason of stock rename, and growth of the public company. Empirical results show that the abnormal trading returns around the period of stocks rename and the overreaction of the market on the rename of the stock are found. In the short term, the differences in investor concern significantly affect the price of the renamed stock, and investor attention is positively correlated with the price of the renamed stock. The difference of investor attention between different types of renamed stocks leads to the stocks have higher abnormal returns which are small or have substantial changes or are in a popular industry. In this paper, according to the results of the study, investment advice and relevant policy recommendations have been put forward for investors, securities companies and securities regulatory authorities. At the end of this paper, the shortcomings of this study are analyzed and the possible direction of further research is also proposed.