Do markets react to weather? Stock price reactions to weather alerts

Styliani Panetsidou and Angelos Synapis

Economics Letters, 2025, vol. 255, issue C

Abstract: This paper examines the impact of weather alerts on stock prices. Using an event-study methodology, we show that the market responds negatively to weather alerts. This reaction is more pronounced when alerts indicate severe impact or involve multiple weather phenomena. Furthermore, firms operating in weather-sensitive industries as well as smaller, high-risk and high-growth firms listed on the junior growth market, experience significantly more negative stock returns. However, frequent updates about the alerts mitigate the negative market impact. Overall, the findings suggest that investors incorporate weather alerts into asset pricing, highlighting the importance of providing regular information during extreme weather events.

Keywords: Event-study; Stock market; Stock performance; Weather alerts (search for similar items in EconPapers)
JEL-codes: G12 G14 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:255:y:2025:i:c:s016517652500388x

DOI: 10.1016/j.econlet.2025.112551

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