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Psychological barriers in European stock markets: Where are they?

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  • Dorfleitner, Gregor
  • Klein, Christian

Abstract

We examine four European stock indices and the prices of eight major German stocks for indications of psychological barriers. The frequency, (expected) returns, intraday volatility and trading volume of these assets are studied contingent on whether the prices lie within a certain range around round numbers. Our results indicate that psychological barriers do not exist on a consistent basis. It seems that some barriers have disappeared after these anomalies have been published. This discovery is consistent with current literature findings about disappearing stock market anomalies.

Suggested Citation

  • Dorfleitner, Gregor & Klein, Christian, 2009. "Psychological barriers in European stock markets: Where are they?," Global Finance Journal, Elsevier, vol. 19(3), pages 268-285.
  • Handle: RePEc:eee:glofin:v:19:y:2009:i:3:p:268-285
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    References listed on IDEAS

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    8. G. Kohers & N. Kohers & V. Pandey & T. Kohers, 2004. "The disappearing day-of-the-week effect in the world's largest equity markets," Applied Economics Letters, Taylor & Francis Journals, vol. 11(3), pages 167-171.
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    Cited by:

    1. repec:eee:quaeco:v:68:y:2018:i:c:p:158-170 is not listed on IDEAS
    2. Carrera, César, 2015. "Tracking exchange rate management in Latin America," Review of Financial Economics, Elsevier, vol. 25(C), pages 35-41.
    3. Carrera, César, 2014. "Tracking the Exchange Rate Management in Latin America," Working Papers 2014-020, Banco Central de Reserva del Perú.
    4. Kalaichelvan, Mohandass & Lim Kai Jie, Shawn, 2012. "A Critical Evaluation of the Significance of Round Numbers in European Equity Markets in Light of the Predictions from Benford’s Law," MPRA Paper 40960, University Library of Munich, Germany.
    5. Mark Cummins & Brian M. Lucey & Michael M. Dowling, 2014. "Behavioral Influences in Non-Ferrous Metals Prices," The Institute for International Integration Studies Discussion Paper Series iiisdp459, IIIS.
    6. repec:eee:intfin:v:49:y:2017:i:c:p:1-14 is not listed on IDEAS
    7. Cummins, Mark & Dowling, Michael & Lucey, Brian M., 2015. "Behavioral influences in non-ferrous metals prices," Resources Policy, Elsevier, vol. 45(C), pages 9-22.

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