Effect of induced magnetic domain price fluctuations in the Tehran Stock Exchange

Subject Areas : Journal of Investment Knowledge

Saeid Fallahpour ¹ (Assistant Professor of Tehran University School of Management)
Zahra Mohammadian ² (Master of Tehran University)

Received: 2014-11-26 Accepted : 2015-02-01 Published : 2016-03-20

Keywords: Magnets effect, limit price, trading mechanism,

Abstract :

It is about nine years that price limit has been implemented in Tehran stock exchange to limit price fluctuations like many other emerging markets . Although this mechanism has been used for a long time in Iran and other parts of universe, researchers don’t have similar attitudes toward its pros and cons. One of the price limit’s implication on stock market mentioned by proponents of this mechanism is magnet effect. The magnet effect suggests that the asset price accelerates toward the limits as it gets closer to the limits. This project employs panel logit model to test magnet effect hypothesis across periods with different price limit. It also tests magnet effect in upper and lower price limits

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