Prof. Jayanth R. Varma’s Financial Markets Blog

A blog on financial markets and their regulation

Icesave: What is in a name?

The Special Investigation Committee set up by the Icelandic
parliament (Althingi) to investigate and analyse the processes leading
to the collapse of the three main banks in Iceland submitted its
report this week. A portion of the report is available in English.

One of the interesting stories in the report (Chapter 18, page 5)
is about the choice of the brandname Icesave for the deposit accounts
offered by the Icelandic Bank, Landsbanki in the UK and in the
Netherlands. The SIC states:

… Arnason [CEO of Landsbanki] also described how the brand name
Icesave was created. He claimed that Landsbanki representatives had
initially thought it was negative for an Icelandic bank to market
deposit accounts in the UK. An advertising agency employed by the bank
pointed out that it would never be possible to conceal the origin of
the bank and, therefore, it would be better to simply advertise it
especially. As a result, the brand name “Icesave” was

… Research indicated that a simple and clear message together with a
strong link to Iceland would prove beneficial.

I think this has some implication for the literature about the
relationship between geographical names on stock prices. For example,
Kee-Hong Bae and Wei Wang show that during the China stock market boom
in 2007, Chinese stocks listed in the US that had China or Chinese in
their names significantly outperform US listed Chinese stocks that do
not have China or Chinese in their names. (“What’s in a
‘China’ Name? A Test of Investor Sentiment

What the Icesave example shows is that the choice of the name is
not independent of the advertising, pricing and other strategies of the
company. Some of what appears to be the result of a name change might in
fact be due to other changes in the company’s business and

This might be true even in case of other studies about the impact
of name changes on the stock price. For example, Cooper, Dimitrov, and
Rau (“A by Any Other Name”, Journal of
56 (2001), 2371–2387) found that stock prices rose 74%
when they changed their names to dot com names in 1999. Similarly, Rau,
Patel, Osobov, Khorana and Cooper (Journal of Corporate
11 (2005), 319-335) showed that stock prices rose when
firms removed from their name after the bubble burst.

It is possible that these name changes were also accompanied by
changes in business strategies.


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