Company Name Fluency and Stock Returns

textabstractRecent research shows that stocks with fluent names trade at higher prices, but it is not clear whether fluency conveys information or simply appeals to unsophisticated investors. In this paper, we tease out these two hypotheses. We find that fluent stocks yield higher risk-adjusted returns than nonfluent ones, and that this difference increases with the size of noise trader demand. These results lend support to the information story, according to which fluency is only partly reflected in prices due to noise traders' inability to evaluate it. Our findings speak to a more general literature on the underpricing of intangibles.