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A firm that shares a name with its founder earns higher profits

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A GOOD business name can be pricey. An entrepreneur looking for the perfect one can hire a naming agency to offer ideas, but that can cost tens of thousands of dollars. That may explain why many founders follow the example of the current American president and name their businesses after themselves. A recent article* by academics from the Fuqua School of Business at Duke University in North Carolina suggests that doing so not only saves money—it can also boost profits.

The study looked at small businesses in western Europe. It relied on a sample of almost 2m firms, data for which are contained in Amadeus, a commercial database. Firms in the sample tended to be, on average, fairly young, with few shareholders and employees. Checking the surnames of the largest shareholders, the authors found that 19% of firms were named after their founders.

After accounting for other factors, firms that bore their largest shareholder’s name enjoyed a return on assets (ROA) that…Continue reading

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