Abstract
The purpose of this study is to examine patterns of price limit hits for stocks listed on the Tokyo Stock Exchange. Explanations are provided for the empirical findings and the extent to which the price limit hit patterns are related to existing stock returns patterns. We argue that if patterns of price limits can be explained in the same way as the patterns of stock returns, this means price limit hits are not entirely due to noise trading. The Results show an increase of limit hits on Monday and Tuesday. These results of limit hits are consistent with the existing literature for the day-of-the-week effect of stock returns carried out in Japan. This indicates that such patterns of price limit hits are not all due to noise trading.
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