Weather, Biorhythms and Stock Returns - Some Preliminary Irish Evidence

33 Pages Posted: 7 Jan 2003  

Brian M. Lucey

Trinity Business School, Trinity College Dublin; University of Ljubljana - Faculty of Economics

Michael M. Dowling

ESC Rennes School of Business

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Date Written: October 2004

Abstract

We investigate whether there exists a relationship between eight proxy variables for investor mood (based on the weather, biorhythms, and beliefs) and daily Irish stock returns over the period 1988 to 2001. Our study is motivated by recent research which argues that people's decisions are influenced by their feelings, especially when the decision involves risk and uncertainty (e.g. Loewenstein et al., 2001). We find that some of the variables proposed in the literature (rain and time changes around daylight savings) are minor but significant influences. We also find preliminary evidence for the relationship between mood proxy variables and equity returns being more pronounced in times of positive recent market performance. This finding is consistent with psychological research showing that people in a good mood (in this case, because of presumed gains in their investment portfolios) are more likely to allow irrelevant mood factors to influence their decision-making (e.g. Mackie and Worth, 1991).

Keywords: weather effect, market efficiency, mood, anomaly

JEL Classification: G12, G14

Suggested Citation

Lucey, Brian M. and Dowling, Michael M., Weather, Biorhythms and Stock Returns - Some Preliminary Irish Evidence (October 2004). Available at SSRN: https://ssrn.com/abstract=345000 or http://dx.doi.org/10.2139/ssrn.345000

Brian M. Lucey

Trinity Business School, Trinity College Dublin ( email )

The Sutherland Centre, Level 6, Arts Building
Dublin 2
Ireland
+353 1 608 1552 (Phone)
+353 1 679 9503 (Fax)

University of Ljubljana - Faculty of Economics ( email )

Kardeljeva ploscad 17
Ljubljana, 1000
Slovenia

Michael M. Dowling (Contact Author)

ESC Rennes School of Business ( email )

Rue Robert d'arbrissel, 2
Rennes, 35000
France

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