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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