Does Mood Affect Trading Behavior?
57 Pages Posted: 30 Jun 2011 Last revised: 13 Oct 2015
Date Written: August 5, 2015
The assumption that mood affects investors’ behavior in the field is gaining acceptance due to experimental studies and papers linking stock returns with environmental variables, such as weather and length of day. To identify mood effects this paper utilizes account level stock trading data from all investors in Finland, a country with significant variation in weather and length of day. While some weather-related mood variables and calendar effects are individually significant, little of the day-to-day variation in trading is collectively explained by all such factors. In contrast, we find strong seasonal lower frequency patterns that seem connected to vacations.
Keywords: mood, trading behavior, weather, seasonal affective disorder (SAD), stock market
JEL Classification: D03, G11, G12
Suggested Citation: Suggested Citation