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Influence of Cultural Factors on Price Clustering and Price Resistance in China's Stock Markets

19 Pages Posted: 11 Dec 2007  

Bill M. Cai

Independent

Charlie X. Cai

University of Liverpool Management School

Kevin Keasey

University of Leeds - Division of Accounting and Finance

Abstract

This paper builds on prior research by analysing the impact of cultural factors on both price clustering and price resistance in China's stock markets. The results support the presence of cultural factors impacting on price clustering with the digit 8 showing a higher propensity for clustering and the digits 4 and 7 showing a lower propensity in the A-share market, where stock is denominated in renminbi and traded by mainland Chinese. These results are further supported by an analysis of the B-share market, where cultural factors have no (or less) impact on the price of Chinese stocks traded by foreign investors in US dollars (or in Hong Kong dollars). A range of measures for price resistance show the digits 0 and 5 to be significant resistance points in the A-share market. Although digit 8 cannot be considered as a resistance point, its resistance level is highest among the remaining numbers. In conclusion, cultural factors help to explain not only price clustering in the Chinese stock markets but price resistance levels as well, albeit at a weak level.

JEL Classification: G12, G14, G15, Z10

Suggested Citation

Cai, Bill M. and Cai, Charlie X. and Keasey, Kevin, Influence of Cultural Factors on Price Clustering and Price Resistance in China's Stock Markets. Accounting & Finance, Vol. 47, No. 4, pp. 623-641, December 2007. Available at SSRN: https://ssrn.com/abstract=1067082 or http://dx.doi.org/10.1111/j.1467-629X.2007.00221.x

Bill M. Cai

Independent

No Address Available

Charlie Xiaowu Cai

University of Liverpool Management School ( email )

University of Liverpool
Liverpool, L69 7ZA
United Kingdom

Kevin Keasey (Contact Author)

University of Leeds - Division of Accounting and Finance ( email )

Leeds LS2 9JT
United Kingdom
+44 (0)113 343 2618 (Phone)

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