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Overnight returns, daytime reversals, and anchoring bias

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  • Donghoon Kim
  • Jihoon Goh

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.

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  • Donghoon Kim & Jihoon Goh, 2025. "Overnight returns, daytime reversals, and anchoring bias," Applied Economics Letters, Taylor & Francis Journals, vol. 32(16), pages 2310-2314, September.
    • Handle: RePEc:taf:apeclt:v:32:y:2025:i:16:p:2310-2314
    DOI: 10.1080/13504851.2024.2332578
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