The allocation of symbols and formatting convention is specific to each stock exchange. The symbols were kept as short as possible to reduce the number of characters that had to be printed on the ticker tape and to make it easy to recognize by traders and investors. A stock symbol can consist of letters, numbers or a combination of both and is a way to uniquely identify that stock. OODH is for ORION DHC, Inc., and HD is for Home Depot, Inc. “ There’s Something in a Name: Value Relevance of Congruent Ticker Symbols ” is published in Customer Needs and Solutions.Stock symbols are unique identifiers assigned to each security traded on a particular market. If you already have those, then you might want to take a look at your ticker symbol.” The Study Advertising, distribution, and performance all contribute to your brand value. “As a corporate brand represents your equity with customers, a congruent ticker symbol represents your equity with investors,” she says. She’s surprised that 75 percent of companies that changed symbols from 2005 to 2008 still ended up with alphabet soup. On the other hand, if a firm doesn’t have a recognizable symbol, it should be a no-brainer to create one. Then you can highlight your performance.” “The symbol increases the chance that they’ll take a look at your stock. If you have a familiar ticker symbol, it gives investors another reason to look your way, says Srinivasan. A model that included it was 40 percent more accurate at predicting a company’s market value than a model that did not. The presence or absence of a congruent ticker symbol also proved to be a powerful forecasting tool. “What the ticker symbol allows you to do is leverage the brand equity or the superior performance you already have.” - Raji Srinivasan But it did raise the values of firms that had other things going for them: strong financial performance, advertising dollars, or number of stores. They also measured variables that might interact with ticker symbols to affect those values, from size to how much it spends on advertising.īy itself, they found, a congruent ticker symbol did not raise a firm’s intangible value.
The bigger the ratio, the higher the intangible value that investors see in the company.įor each retailer and for each year, the researchers calculated those intangible values. Economists compute it by comparing a firm’s market value - roughly, its stock price times its number of outstanding shares - to the book value of its assets. How do you place a value on an intangible asset like a ticker symbol?Īctually, Wall Street does put a number on intangible assets, Srinivasan says. Seventy-eight had congruent symbols, like TGT for Target, while the rest did not, like JWN for Nordstrom. To find out, she and Nita Umashankar of Georgia State University looked at 181 publicly-traded retailers from 1994 to 2006.
“I feel safer, and I feel more interested in buying it.”Įxtra investor attention wouldn’t help a firm that was floundering, reasoned Srinivasan, but it might aid one that offered other attractions, such as financial strength. “It might be something that makes the stock seem more familiar to me,” she says. They are buying your stock.” - Raji SrinivasanĪ recognizable ticker symbol, she suspected, might catch investors’ eyes by raising their processing fluency - how easily they process information about a stimulus. “Think of your firm’s investors as customers. “A company’s stock is thought of largely as a financial problem, but there are marketing considerations as well.
The reason, remarked a couple of their CEOs, was to increase their visibility to investors and, they hoped, increase the value of their stock.Ĭould something as innocuous as a ticker symbol lift a company’s shares? It made sense to Srinivasan, who studies the connections between marketing and finance. When McCombs Marketing Professor Raji Srinivasan looked at the changes, she noticed something striking: a 63 percent jump in the number of congruent symbols - ones that were similar to a firm’s name.
companies changed their ticker symbols, the three-to-five letter monikers that identify them in stock tables.