Nomen Est Omen? How and When the Fluency of Company Names Affects Return Expectations

Investors perceive stocks of companies with fluent names as more profitable. This perception may result from two different channels: direct, non-deliberate affect toward fluent names or indirect, deliberate interpretation of fluent names as a signal for company quality. We present a preregistered novel experimental design to disentangle these channels and test their limitations. Our results indicate that the direct fluency effect outweighs an indirect effect; that is, investors do not treat company names as signals for company quality. However, whereas the direct fluency effect is strong in isolation, it has limitations when investors are confronted with additional information about the stock