Investors Will Like Your Company Better if You Shorten Its Name

On average, companies with short, simple names attract more shareholders, generate greater amounts of stock trading, and perform better on certain financial measures than companies with hard-to-process names such as National Oilwell Varco and Freeport-McMoRan Copper & Gold, say T. Clifton Green of Emory University and Russell E. Jame of the University of Kentucky. A 1-step increase in name "fluency" on a 5-step scale, such as reducing name length by 1 word, is associated with a 2.53% increase in market-to-book ratio, which would translate to $3.75 million in added market value for the median-size firm in the authors' sample. Selecting an easy-to-process company name is a low-cost method for improving investor recognition and increasing firm value, the authors say.