The Information Content of Corporate Name Changes at the Announcement of Hong Kong
Seasoned Equity Offerings
Xueping Wu and Zheng Wang
Department of Econ. and Finance, City University of Hong Kong
Abstract
We argue that costly corporate name changes convey information about corporate characteristics, such as growth potential
that plays a value-added role in the market response to SEOs. We find that, in a sample for 1989-1997 in Hong Kong,
issuing firms with new names enjoy a significant and larger CAR of 3.3 percent for a two-day SEO-announcement window,
than do other issuers. We confirm with a cross-sectional analysis that this name change effect is robust and largely stems
from corporate name changes due to genuine corporate restructuring. Our results are consistent with the multiple-signals model
as in Ambarish, John, and Williams (1987).