Do individuals and institutions make different short selling strategies around the 52-week highs?

Mei-Chen Lin and Meng Ping Chou

International Review of Economics & Finance, 2023, vol. 88, issue C, 386-407

Abstract: In this study, we investigate whether the effects of the price proximity and timing recency of 52-week highs on short sellers' trading strategies vary with investor type. The results show individual short sellers' interpretations of price increases are influenced by the anchoring bias; thereby leading them to increase their short positions when the stock's price is close to its 52-week high. However, institutional short sellers exploit the underreaction associated with the 52-week high and decrease their short positions. Individual short sellers' biased trading brings losses to investors who mimic this trading strategy.

Keywords: Anchor bias; Recency effect; 52-Week high; Short selling (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:88:y:2023:i:c:p:386-407

DOI: 10.1016/j.iref.2023.06.028

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