Performance Of Stocks Tied To Simplicity Of Company’s Name
A new study of initial public offerings (IPOs) on two major American stock exchanges shows that people are more likely to purchase newly offered stocks that have easily pronounced names than those that do not, according to two Princeton University psychologists. The effect extends to the ease with which the stock's ticker code, generally a few letters long, can be pronounced.
They asked a group of students to estimate how well a series of fabricated stocks would perform based only on the stocks' names. "We gave them the list of company names and asked, 'How well do you think the stocks would perform?'" Oppenheimer said. "The stocks were an interesting domain of inquiry." The relationship was very strong, the students believed that the easily pronounceable stocks would perform best.