Home > Medical Research Archives > Issue 149 > ‘Halo Effect’: Stock Returns to Firms with Closely Matching Tickers As IPOs
Published in the Medical Research Archives
Feb 2017 Issue
‘Halo Effect’: Stock Returns to Firms with Closely Matching Tickers As IPOs
Published on Feb 26, 2017
DOI
Abstract
I investigate whether stock prices of publicly traded companies with ticker symbols that are a close match to tickers of upcoming IPOs benefit from a ‘halo effect’ in the days leading up to the IPO. For each of 663 IPOs between Jan 2008 and June 2014, I identify five firms whose ticker symbols closely match that of the IPO. Using a variety of statistical techniques, I confirm the presence of a statistically significant ‘halo effect’ with matching firms earning an average excess return of 3.8% in the 15-day pre-IPO period ending on the day of the IPO. Firms whose tickers match internet IPOs earn a much higher 1-day pre-IPO return of 6.4%. Finally, I find that the ‘halo effect’ is not a temporary phenomenon; matching firms continue to earn an average excess return of 1.9% in the 15-day post-IPO period.
Author info
Vijay Kadiyala
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