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The recent researches in behavioral finance are directed towards the environmental
factors which can have systematic effects on investors' mood, and thus on their trading
behaviors. Earlier studies in this field of research focused on the effect of the meteorological
condition variations on the stock returns of New York, for example, Saunders (1993), that was
approved later by Hirshleifer and Shumway (2003), Dowling and Lucey (2005 and 2008), Levy
and Galili (2008), among others. The basic motivation for the search of a link between
the climate and the stock market prices is the psychological evidence. This evidence
documents that people feel better when the sun appears and that this wellbeing leads to a good
mood with regard to the investment prospects.
Because of the local nature of the meteorological phenomenon, other researchers
have tried to discover the implications of the seasonal variations. The most notable studies in
this direction are: the consideration of the lunar cycle effects (Dichev and Janes, 2003;
Dowling and Lucey, 2005 and 2008; and Yuan et
al., 2006); daylight savings called `Daylight
Savings Time Change' (Kamstra et al., 2000 and 2002; Pinegar, 2002; Worthington, 2003; Lamb et al., 2004; Dowling and Lucey, 2008; and
Müller et al., 2009); and seasonal variation in the
length of the day and the associated medical phenomenon called `Seasonal Affective Disorder
or SAD' (Kamstra et al., 2003a; Garret et
al., 2005; Dowling and Lucey, 2005 and 2008;
and Jacobsen and Marquering, 2008). These authors have provided an exploration method of
the seasonal character of the stock returns, basing their arguments on clinical research in
medicine and psychology, which indicates that the low levels of luminous hours lead to a high
incidence of SAD, which in turn leads to a risk-averse behavior (Kamstra et al., 2003a and 2003b; and Garret et
al., 2005). |
