The Effects of Daylight Saving Time Adjustments on Investor Information Processing

52 Pages Posted: 25 Jan 2021 Last revised: 31 Oct 2023

See all articles by Tyler J. Kleppe

Tyler J. Kleppe

University of Kentucky - Von Allmen School of Accountancy

Andrew T. Pierce

J. Mack Robinson College of Business, Georgia State University

Zac Wiebe

University of Arkansas - Sam M. Walton College of Business

Teri Lombardi Yohn

Emory University Goizueta Business School

Date Written: August 31, 2023

Abstract

Although Daylight Saving Time (DST) is thought to provide economic benefits, extant research documents various adverse effects of DST adjustments. However, prior research provides little conclusive evidence about the effects of DST adjustments on capital market participants. We examine the effects of “spring forward” DST advances, which disrupt the human sleep cycle and economic activities, on investors’ processing of earnings news. We find a delayed price response to earnings news released during the first week following a DST advance. We also find that this effect is stronger among firms with investors who are more likely to be trading on earnings news and among firms with less sophisticated investors. Our findings contribute to research on the unintended consequences of DST adjustments and to the growing literature on intra-investor variation in disclosure processing costs. Our study may be of interest to legislators currently debating proposed legislation that would eliminate DST phasing.

Keywords: daylight saving time, disclosure processing, earnings announcements, price discovery

JEL Classification: G14, M41, M48, D83

Suggested Citation

Kleppe, Tyler J. and Pierce, Andrew T. and Wiebe, Zac and Yohn, Teri Lombardi, The Effects of Daylight Saving Time Adjustments on Investor Information Processing (August 31, 2023). Available at SSRN: https://ssrn.com/abstract=3767211 or http://dx.doi.org/10.2139/ssrn.3767211

Tyler J. Kleppe (Contact Author)

University of Kentucky - Von Allmen School of Accountancy ( email )

Lexington, KY 40506
United States

Andrew T. Pierce

J. Mack Robinson College of Business, Georgia State University ( email )

P.O. Box 4050
Atlanta, GA 30303-3083
United States

Zac Wiebe

University of Arkansas - Sam M. Walton College of Business ( email )

Fayetteville, AR 72701
United States

Teri Lombardi Yohn

Emory University Goizueta Business School ( email )

201 Dowman Drive
Atlanta, GA 30322
United States

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