Why founder surnames signal responsibility

Two law firms offer the same service. One is named after its partners; the other has a constructed brand name. Potential clients rate the eponymous firm as more accountable, even though both are registered in the same jurisdiction and subject to the same regulation.

What everyone sees

The surname reads as tradition or formality — a convention of the profession rather than a signal about accountability. The constructed name is read as modern. Neither is analysed as carrying a specific signal about who is responsible if something fails.

What is actually happening

Belenzon, Chatterji and Daley studied eponymous firms and found that they are associated with higher quality in some domains, attributing this to the reputational stake the founder has in the firm. A surname is a bond: the founder’s personal reputation travels with the firm, and misconduct attaches to a person rather than to a brand that can be retired. This mirrors Spence’s signalling logic: a costly signal (putting your name on the product) is credible because the cost of failure is personal and non-transferable.

Why it stays hidden

The signal hides because it is processed as a naming convention rather than as a commitment. The client does not consciously think “this person’s name is at stake,” but the inference runs in the background: a named firm has a person who can be blamed, which is a form of accountability that a constructed brand can escape by renaming. The signal’s effectiveness depends on this unconscious processing, since an explicit claim of accountability would be less credible than the structural implication of the name itself.