The name's the game: Does marketing impact the value of corporate name changes?

a r t i c l e i n f o Keywords: Corporate naming Branding Advertising Marketing capability Chief marketing officer Shareholder value Each year, thousands of firms change their names, many in the absence of an accompanying M&A event. Existing research reveals significant heterogeneity in the stock market response to such pure name changes. Why do some firms reap greater stock market rewards for changing their names? Our study of name change announcements by 180 publicly listed U.S. firms reveals that marketing-related factors play a critical role in the value of corporate name changes: Firms with high marketing influence in their C-suite, high marketing investments, and high marketing capability receive greater stock market rewards for changing their names. Firms that change their names to leverage a strong brand in their portfolio, or to proactively communicate a change in their scope of business (i.e., a future change in their product portfolio or geographical markets), are also rewarded more than firms that change their names to retroactively align their names with a new scope. Each year, thousands of firms across the globe change their names (Standard & Poor's Capital IQ database), many in the absence of an accompanying merger and acquisition (M&A) event. Prior scholars (e.g., Wu, 2010) have classified name changes unrelated to M&As — the type of changes we focus on in this article — as pure name changes. Examples include RIM's name change to Blackberry, Apple Computer Inc.'s name change to Apple Inc., and Federated Department Stores Inc.'s name change to Macy's Inc. A firm's name change is a major strategic action that usually comes with significant tangible costs associated with communicating the change to various stakeholders, and intangible costs associated with loss of the existing name. One wonders whether the benefits of these changes actually justify their costs. 1989) report no association between corporate name changes and shareholder value. Research that sheds light on these inconclusive results and explores the boundary conditions under which name changes increase shareholder value is limited on at least two fronts. First, little work has gone into understanding whether certain types of name changes are rewarded differently than others, and if so, what explains these differential rewards. Second, existing research on corporate name changes (e. mostly on finance-related contextual variables such as prior firm performance and firms' classification as financial or non-financial institutions. Notable for their omission are studies exploring the role …