Corporate insiders’ exploitation of investors’ anchoring bias at the 52‐week high and low

Lasfer, Meziane ORCID: 0000-0003-2338-672X and Ye, Xiaoke ORCID: 0000-0003-0607-2577 (2024) Corporate insiders’ exploitation of investors’ anchoring bias at the 52‐week high and low. Financial Review, 59 (2). pp. 391-432.

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Official URL: http://dx.doi.org/10.1111/fire.12371

Abstract

<jats:title>Abstract</jats:title><jats:p>We find that insiders adopt dissimulation strategies to conceal their informational advantage and trade profitably when their firms’ stock prices reach 52‐week highs and lows, exploiting the anchoring biases of uninformed investors. Insiders’ trading profitability depends on their firms’ future stock returns, operating efficiency, and investment sentiment, but not on earnings surprises. We document that male board members and insiders with long investment horizons are more likely to use dissimulation strategies. Overall, we provide evidence that insiders benefit from these price extremes, despite their status as publicly available, irrelevant, historical price levels that normally should not predict future stock returns.</jats:p>

Item Type:	Article
Divisions:	Faculty of Humanities and Social Sciences > School of Management
Depositing User:	Symplectic Admin
Date Deposited:	03 Nov 2023 16:26
Last Modified:	08 Apr 2024 02:45
DOI:	10.1111/fire.12371
Related URLs:	Publisher
URI:	https://livrepository.liverpool.ac.uk/id/eprint/3176528