Post-earnings-announcement-drift and 52-week high: Evidence from Korea

Jihoon Goh and Byoung-Hyun Jeon

Pacific-Basin Finance Journal, 2017, vol. 44, issue C, 150-159

Abstract: Post-earnings-announcement drift (PEAD) is frequently discovered in numerous countries including Korea. We attempt to explain PEAD in the Korean market using anchoring bias. Investors interpret impact of earnings news based on a stock's nearness to 52-week high, and hence underreact to positive earnings news if the stock price is near its peak. We find that among positive earnings stocks, PEAD is pronounced when they are near 52-week highs. Furthermore, excessive optimism in analyst forecasts is larger among stocks far from 52-week highs. Lastly, individual investors' buying pressure around earnings announcement is concentrated on stocks far from 52-week highs.

Keywords: Post-earnings-announcement-drift; Anchoring bias; Nearness to 52-week high (search for similar items in EconPapers)
JEL-codes: G12 G14 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:44:y:2017:i:c:p:150-159

DOI: 10.1016/j.pacfin.2017.06.008

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