'THE GAME OF THE NAME' A study by a group of finance professors at Purdue University shows that
companies that shed their dot-com names, or some other hip, New Economy variation like E*twoMEDIA, saw their share prices rise 15.8% the day the news hit the market and a total of 21.6% in the 30 days following the switch. "I think we are very firmly stating investors are irrational, and here is one of their biases," says P. Raghavendra Rau, one of the study's authors. The group uncovered a number of companies that had played the dot-com game both ways -- adding it on a couple of years ago to get a boost, and then dropping it recently to get yet another boost. For example, the company formerly known as Publishing Co. of North America changed its name to Attorneys.com in 2000, a move that nearly doubled its share price. A year later, it dropped the dot-com moniker for the more conventional 1-800-Attorney, netting another 40% surge in stock prices. The full study, titled "The Game of the Name: Valuation Effects of Name Changes in a Market Downturn," can be found at www.mgmt.purdue.edu/faculty/rau. (Wall Street Journal 18 Dec 2002) http://online.wsj.com/article/0,,SB1040163285667930633.djm,00.html (sub req'd) The paper seems to be at mailbox:/C|/Program Files/Netscape/Users/michael/mail/Inbox?id=BORISf4yp8ARf3sllNY00000077%40boris.mgmt.purdue.edu&number=6223492&part=1.2 The paper -- Michael Perelman Economics Department California State University [EMAIL PROTECTED] Chico, CA 95929 530-898-5321 fax 530-898-5901
