Does mood affect trading behavior?

Markku Kaustia and Elias Rantapuska

No 4, SAFE Working Paper Series from Leibniz Institute for Financial Research SAFE

Abstract: We test whether investor mood affects trading with data on all stock market transactions in Finland, utilizing variation in daylight and local weather. We find some evidence that environmental mood variables (local weather, length of day, daylight saving and lunar phase) affect investors' direction of trade and volume. The effect magnitudes are roughly comparable to those of classical seasonals, such as the Monday effect. The statistical significance of the mood variables is weak in many cases, however. Only very little of the day-to-day variation in trading is collectively explained by all mood variables and calendar effects, but lower frequency variation seems connected to holiday seasons.

Keywords: mood; seasonal affective disorder (SAD); weather; trading behavior; stock market (search for similar items in EconPapers)
JEL-codes: D03 G11 G12 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-cbe and nep-mst
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:safewp:4

DOI: 10.2139/ssrn.2209665

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