Nines in the Endings of Stock Prices

27 Pages Posted: 26 May 2005

See all articles by Mark Bagnoli

Mark Bagnoli

Purdue University

Jinyoung Park

Purdue University - Krannert School of Management

Susan G. Watts

Purdue University

Date Written: January 2006

Abstract

In this paper, we ask whether investors' responses to nines in the rightmost digits of stock prices are similar to consumers' responses to nines in the rightmost digits of retail prices. In contrast to the increase in demand that is often observed for 9-ending retail prices, excessive overnight selling tends to follow stocks that close on 9-ending prices. Additional analysis indicates this may be due to a resistance level created by round-dollar stock prices. This finding sheds light on alterative explanations offered for the clustering of ending digits in prices and may provide guidance on how to expand or adjust the maximizing explanations for the phenomenon.

Keywords: Behavioral finance, rational prices, barriers, resistance level, price clustering

JEL Classification: D40, G10, G12, M30

Suggested Citation

Bagnoli, Mark E. and Park, Jinyoung and Watts, Susan G., Nines in the Endings of Stock Prices (January 2006). Available at SSRN: https://ssrn.com/abstract=728544 or http://dx.doi.org/10.2139/ssrn.728544

Mark E. Bagnoli

Purdue University ( email )

Department of Accounting
West Lafayette, IN 47907-1310
United States
765-494-4484 (Phone)
765-496-1778 (Fax)

Jinyoung Park

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

Susan G. Watts (Contact Author)

Purdue University ( email )

West Lafayette, IN 47906
United States

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