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

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  • Lin, Mei-Chen
  • Chou, Meng Ping

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.

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  • Lin, Mei-Chen & Chou, Meng Ping, 2023. "Do individuals and institutions make different short selling strategies around the 52-week highs?," International Review of Economics & Finance, Elsevier, vol. 88(C), pages 386-407.
    • Handle: RePEc:eee:reveco:v:88:y:2023:i:c:p:386-407
    DOI: 10.1016/j.iref.2023.06.028
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