Why Susie owns Starbucks

The name letter effect in security selection

Heather S. Knewtson, Richard W Sias

Research output: Contribution to journalArticle

6 Citations (Scopus)

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 2010
Externally publishedYes

Fingerprint

Security selection
Institutional investors
Psychological
Endowments
Undergraduate students
Investors
Ownership
Evaluation
Institutional shareholders

Keywords

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

ASJC Scopus subject areas

  • Marketing

Cite this

Why Susie owns Starbucks : The name letter effect in security selection. / Knewtson, Heather S.; Sias, Richard W.

In: Journal of Business Research, Vol. 63, No. 12, 12.2010, p. 1324-1327.

Research output: Contribution to journalArticle

@article{0ec6afb488084715a5408939c182b4d2,
title = "Why Susie owns Starbucks: The name letter effect in security selection",
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.",
keywords = "Investor bias, Name letter effect, Role of emotions, Security selection",
author = "Knewtson, {Heather S.} and Sias, {Richard W}",
year = "2010",
month = "12",
doi = "10.1016/j.jbusres.2009.12.003",
language = "English (US)",
volume = "63",
pages = "1324--1327",
journal = "Journal of Business Research",
issn = "0148-2963",
publisher = "Elsevier Inc.",
number = "12",

}

TY - JOUR

T1 - Why Susie owns Starbucks

T2 - The name letter effect in security selection

AU - Knewtson, Heather S.

AU - Sias, Richard W

PY - 2010/12

Y1 - 2010/12

N2 - 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.

AB - 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.

KW - Investor bias

KW - Name letter effect

KW - Role of emotions

KW - Security selection

UR - http://www.scopus.com/inward/record.url?scp=77958176598&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=77958176598&partnerID=8YFLogxK

U2 - 10.1016/j.jbusres.2009.12.003

DO - 10.1016/j.jbusres.2009.12.003

M3 - Article

VL - 63

SP - 1324

EP - 1327

JO - Journal of Business Research

JF - Journal of Business Research

SN - 0148-2963

IS - 12

ER -