Why Susie owns Starbucks: The name letter effect in security selection

Heather S. Knewtson, Richard W. Sias

Research output: Contribution to journalArticlepeer-review

6 Scopus citations

Abstract

We examine whether security selection is influenced by the name letter effect-a psychological predisposition to select items that start with leading own name letters. Two sets of tests reveal evidence that the name letter effect influences investors' security selection decisions. First, breadth of ownership (as measured by the number of institutional investors holding the security) is positively related to U.S. name letter frequency, e.g., stocks that begin with the common name letter "M" exhibit a greater number of institutional shareholders than stocks that begin with the less common name letter "X." Second, undergraduate students managing university endowment funds are more likely to select securities for evaluation when the stock's name begins with the same letter as their name.

Original languageEnglish (US)
Pages (from-to)1324-1327
Number of pages4
JournalJournal of Business Research
Volume63
Issue number12
DOIs
StatePublished - Dec 1 2010
Externally publishedYes

Keywords

  • Investor bias
  • Name letter effect
  • Role of emotions
  • Security selection

ASJC Scopus subject areas

  • Marketing

Fingerprint Dive into the research topics of 'Why Susie owns Starbucks: The name letter effect in security selection'. Together they form a unique fingerprint.

Cite this