Weather effects on earnings response coefficients: international evidence

Chien-Ju Lu, Chen-Lung Chin and Yuanchen Chang

Asia-Pacific Journal of Accounting & Economics, 2013, vol. 20, issue 3, 315-333

Abstract: We examine the relationship between weather effects and investor response to a firm's quarterly earnings announcements using data from 20 countries. Our results show that market cumulative abnormal returns are associated with unexpected earnings and with weather measures. Investors in some countries respond more negatively (less positively) to bad (good) earnings news when earnings are announced on cloudy days than on sunny days. We also find an asymmetric weather effect that is more significant for bad earnings announcements, on average. Moreover, the extent of this weather effect is less for countries with higher financial information transparency and those with common-law systems.

Date: 2013
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DOI: 10.1080/16081625.2012.667526

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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