IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-04086076.html
   My bibliography  Save this paper

Fundamental Strength and the 52-Week High Anchoring Effect

Author

Listed:
  • Zhaobo Zhu

    (Audencia Business School)

  • Licheng Sun

    (ODU - Old Dominion University [Norfolk])

  • Min Chen

    (SFSU - San Francisco State University)

Abstract

When stocks are trading near their 52-week high investors tend to have low expectation about their future returns. We contrast such expectations against firms' fundamental strength. For firms with strong fundamentals, we confirm that investors' expectations are too low, which is consistent with the hypothesis that the 52-week high acts as a psychological anchor. We report that a fundamental-strength enhanced 52-week high trading strategy significantly outperform the unconditional strategy by nearly doubling its average return. Moreover, we provide interesting evidence that this anomalous effect is most evident when investor sentiment is high, but absent among more sophisticated institutions and short sellers.

Suggested Citation

  • Zhaobo Zhu & Licheng Sun & Min Chen, 2023. "Fundamental Strength and the 52-Week High Anchoring Effect," Post-Print hal-04086076, HAL.
    • Handle: RePEc:hal:journl:hal-04086076
    DOI: 10.1007/s11156-023-01138-3
    Note: View the original document on HAL open archive server: https://audencia.hal.science/hal-04086076
    as

    Download full text from publisher

    File URL: https://audencia.hal.science/hal-04086076/document
    Download Restriction: no
    File URL: https://libkey.io/10.1007/s11156-023-01138-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zhu, Zhaobo & Ding, Wenjie & Jin, Yi & Shen, Dehua, 2023. "Dissecting the idiosyncratic volatility puzzle: A fundamental analysis approach," Research in International Business and Finance, Elsevier, vol. 66(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-04086076. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.