Overnight returns, daytime reversals, and anchoring bias

Donghoon Kim and Jihoon Goh

Applied Economics Letters, 2025, vol. 32, issue 16, 2310-2314

Abstract: This study explores the impact of anchoring bias on the daily tug-of-war in financial markets, specifically examining the reversal dynamics between overnight and daytime periods in relation to the 52-week high price. After analysing the interplay between anchoring bias and the abnormal intensity of the tug-of-war (AB_NR), our findings reveal a significant AB_NR premium for stocks far from their 52-week high prices. This sheds light on the important role of psychological barriers faced by noise investors during overnight periods in shaping return dynamics.

Date: 2025
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DOI: 10.1080/13504851.2024.2332578

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