We study whether firm name has an effect on firm valuation. Some Chinese firms listed on U.S. stock exchanges have the word "China" or "Chinese" included in their company names ("China-name stocks"), whereas others do not ("non-China-name stocks"). During the China stock market boom in 2007, we find that China-name stocks significantly outperform non-China-name stocks. This is not due to differences in firm characteristics, risk, or liquidity. We also find a significant increase in both abnormal returns and trading volumes of existing China-name stocks to the listing events of new Chinese initial public offerings. This "China-name effect" is largely consistent with the hypothesis that optimistic investor sentiment during the China stock market boom drives up China-name stocks more than non-China-name stocks.
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